NextEra Energy Partners, LP (NEP - Free Report) has inked a deal with an affiliate of its sponsor, NextEra Energy, Inc. (NEE - Free Report) , to purchase a 24% stake in Desert Sunlight Investment Holdings, LLC, for a consideration of approximately $218 million. NextEra Energy Partners intends to issue common units to fund the transaction.
Details of the Agreement
Desert Sunlight Investment Holdings owns two projects, including the 550-megawatt (“MW”) Desert Sunlight Solar Energy Center in Riverside County, CA. The plant utilizes 8 million panels, generating enough power for 160,000 homes.The projects are fully contracted under long-term power purchase agreements and have remaining average contract lives of 21 years.
NextEra Energy Partners expects the acquisition to provide accretion in the range of nearly $43–$53 million to 2016 adjusted EBITDA and $21–$26 million to cash available for distribution. The deal is also expected to lead to an increase in third-quarter 2016 distribution from the current annualized rate of $1.32 per unit to $1.365.
The transaction, expected to close in the fourth quarter of 2016, will expand NextEra Energy Partners' contracted renewable energy projects portfolio to nearly 2,788 MW. Upon its completion, NextEra Energy Resources, which currently has a 50% interest in the projects, will become the managing member.
Investment in Renewable Energy
NextEra Energy Partners expects to bring renewable projects of 2.5 gigawatts into service in 2016 and 2,800–5,400 MW over the 2017-2018 timeframe.
U.S. Industry Outlook
We note that increasing awareness of the drawbacks of fossil fuels is spurring the demand for renewable sources of power generation, particularly solar. Per a U.S. Energy Information Administration report (EIA), total renewables used in the electric power sector of the U.S. are expected to increase 9.5% in 2016 and 5.8% in 2017.
Consumption of renewable energy, other than hydropower, is forecasted to grow 11.8% in 2016 and 11.1% in 2017. Solar energy will constitute 1% of the total U.S. utility-scale generation in 2017, indicating immense room for growth. Solar companies are thus benefitting significantly from the boom.
Zacks Rank &Key Picks
NextEra Energy carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Spark Energy, Inc. and DTE Energy Company (DTE - Free Report) . While Spark Energy sports a Zacks Rank #1 (Strong Buy), DTE Energy carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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NextEra Energy Partners, LP (NEP - Free Report) has inked a deal with an affiliate of its sponsor, NextEra Energy, Inc. (NEE - Free Report) , to purchase a 24% stake in Desert Sunlight Investment Holdings, LLC, for a consideration of approximately $218 million. NextEra Energy Partners intends to issue common units to fund the transaction.
Details of the Agreement
Desert Sunlight Investment Holdings owns two projects, including the 550-megawatt (“MW”) Desert Sunlight Solar Energy Center in Riverside County, CA. The plant utilizes 8 million panels, generating enough power for 160,000 homes.The projects are fully contracted under long-term power purchase agreements and have remaining average contract lives of 21 years.
NextEra Energy Partners expects the acquisition to provide accretion in the range of nearly $43–$53 million to 2016 adjusted EBITDA and $21–$26 million to cash available for distribution. The deal is also expected to lead to an increase in third-quarter 2016 distribution from the current annualized rate of $1.32 per unit to $1.365.
The transaction, expected to close in the fourth quarter of 2016, will expand NextEra Energy Partners' contracted renewable energy projects portfolio to nearly 2,788 MW. Upon its completion, NextEra Energy Resources, which currently has a 50% interest in the projects, will become the managing member.
Investment in Renewable Energy
NextEra Energy Partners expects to bring renewable projects of 2.5 gigawatts into service in 2016 and 2,800–5,400 MW over the 2017-2018 timeframe.
U.S. Industry Outlook
We note that increasing awareness of the drawbacks of fossil fuels is spurring the demand for renewable sources of power generation, particularly solar. Per a U.S. Energy Information Administration report (EIA), total renewables used in the electric power sector of the U.S. are expected to increase 9.5% in 2016 and 5.8% in 2017.
Consumption of renewable energy, other than hydropower, is forecasted to grow 11.8% in 2016 and 11.1% in 2017. Solar energy will constitute 1% of the total U.S. utility-scale generation in 2017, indicating immense room for growth. Solar companies are thus benefitting significantly from the boom.
Zacks Rank &Key Picks
NextEra Energy carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Spark Energy, Inc. and DTE Energy Company (DTE - Free Report) . While Spark Energy sports a Zacks Rank #1 (Strong Buy), DTE Energy carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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