Duke Energy on Wednesday announced a $364 million deal to sell its commercial distributed generation business to an affiliate of ArcLight Capital Partners.
The deal follows a $2.8 billion transaction Duke announced June 12 to sell its utility-scale renewable business to Brookfield Renewables. Both are expected to close by the end of the year and will support Duke’s focus on the growth of its regulated businesses, including plans to incorporate more than 30 GW of regulated renewable energy onto its system by 2035.
“The sale of our commercial renewables businesses streamlines our portfolio and provides the resources to support the long-term needs of our customers in our growing regulated territories,” Duke Energy CEO Lynn Good said in a statement. “Over the next decade, we plan to invest significant amounts of capital to fund the critical energy infrastructure necessary to serve our customers and support our clean energy transition.”
Once the two deals close, Duke will be out of the competitive side of the business, having sold off its generation in PJM to Dynegy (now part of Vistra Energy) in 2015.
Duke’s utilities serve 8.2 million electric customers in North and South Carolina and four other states, along with 1.6 million natural gas customers. It has goals of getting to net-zero methane emissions in its gas utilities by 2030 and net-zero carbon emissions from its 50 GW of utility-owned generation by 2050.
The distributed generation business going to ArcLight includes REC Solar operating assets, a development pipeline and operations and management portfolio, as well as distributed fuel cell projects managed by Bloom Energy. Its employees will transition to ArcLight to maintain business continuity for operations and customers.
Duke has been working on the sale of its businesses for months, taking a $1.3 billion impairment on their sale in the fourth quarter last year and an additional $175 million impairment due to the sale in the first quarter this year. (See Duke Energy Sees Earnings Fall on Warm Winter Weather.)
“Our investment in Duke Energy’s commercial distributed generation business supports ArcLight’s long-standing strategy of acquiring operating assets from leading strategics and creating strong stand-alone renewable platforms,” ArcLight Managing Director Marco Gatti said in a statement. “We believe this is an attractive opportunity to acquire a first-rate commercial distributed generation portfolio, partner with a talented team and build upon longstanding, high-quality customer relationships.”
The deal is subject to customary closing conditions and will need to be approved by FERC due to the sale of the Bloom Energy distributed fuel cell assets.
