The owner-operator of the Shepherds Flat wind farms in north central Oregon is selling the 845 MW complex to Brookfield subsidiary Brookfield Renewable Partners (BRP), according to regulatory filings.
Caithness Energy built the three projects in 2012, and has 20-year power purchase agreements with Southern California Edison for all the generation. The nameplate capacity of the Shepherds Flat South and Central projects is 290 MW for each, and 265 MW for the Shepherds Flat North project.
The $700 million deal, executed in December, is expected to close in March. The companies asked FERC in a Jan. 8 filing for expedited approval of the transaction by March 9 to facilitate the sale [EC21-42], and BRP asked Oregon's Energy Facility Siting Council on Jan. 6 to transfer the wind farms' site certificates to it from Caithness.
Toronto-based BRP entered into the deal because it "includes an attractive repowering opportunity that we expect to deliver by the end of 2022," CEO Connor Teskey said in an earnings call with analysts Feb. 4. It would be "one of the largest in the world and is expected to increase total generation by approximately 25 percent," boosting annual output by approximately 400 GWh.
The repowering will involve increasing turbine blade lengths and upgrading gear boxes and electronics to increase generation, particularly at lower winds speeds. The overall nameplate capacity of each wind farm would remain the same.
CFO Wyatt Hartley noted in the call that "one of the great things" about the deal is that it will allow them to fund the repowering entirely with investment-grade debt and no new capital because the revenue from the increased generation will basically pay for the repowering.
"Having the expertise to undertake a project of this size showcases our decades of experience in driving operational efficiencies while generating attractive returns," Teskey said, adding, "It requires significant operating expertise and a very deep relation with the turbine supplier providing the new technology."
The upgrade is needed to offset lower forecasted wind production, based on a 2020 update to the original wind study from 2012 that noted a high probability for levels to be 16 percent lower, according to a Sept. 28 Fitch Ratings report.
And while Caithness was granted permission in January 2020 by Oregon EFSC to repower the facilities (CU No. 1905 ), Fitch says the company has made little progress toward this goal, citing "market conditions" as the cause of the delay that prompted the agency to downgrade the projects' nonguaranteed debt from 'BBB-' to 'BB'.
Brookfield Renewable has a renewables portfolio of 19,400 MW of capacity and 5,318 generating facilities in North America, South America, Europe and Asia, of which 64 percent is hydro, and the rest is wind, solar, distributed generation, and storage facilities.
The wind includes a 1,200 MW share of the 1,900 MW capacity of 27 projects in the U.S. Nearly 190 MW of this share is in California, and none of it is within BPA's balancing area authority, like the Shepherds Flat projects are.