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NextEra Energy Partners (NEP) to Buy 4 Operating Wind Assets

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NextEra Energy Partners (NEP - Free Report) has entered into a definite agreement with Brookfield Renewable (BEP - Free Report) to acquire four operating wind assets from the latter for $733 million. The four wind assets are located in California and New Hampshire, and have a combined capacity of 391 megawatt (MW). These wind assets are contracted with investment-grade counterparties. The remaining contract life is nearly 13 years at the time of closing.

These acquired assets will boost NextEra Energy Partners’ performance as these are expected to contribute adjusted EBITDA and CAFD of $63-$70 million, each on a five-year average run-rate basis, beginning Dec 31, 2021. Subject to necessary approval, the acquisition is expected to close in third-quarter 2021.

Expansion Via Organic Means & Acquisitions

NextEra Energy Partners continues to expand the renewable portfolio through organic growth and selective acquisitions, which are in sync with the existing renewable energy and natural gas pipeline projects in its portfolio. The completion of three organic growth projects in 2020 is going to boost the company’s performance and cash flow.

The firm entered into an agreement with NextEra Energy Resources, a unit of NextEra Energy (NEE - Free Report) , to acquire a 40% interest in a nearly 1-gigawatt renewables portfolio and 100% interest in a 100-megawatt solar-plus-storage project. This deal will further expand its renewable operation in the United States. Earlier, the firm acquired 600 MW of wind and solar assets from NextEra Energy Resources.

Utilities’ Focus on Clean Energy

A clear transition toward clean energy sources is quite evident from the investment decisions taken by the utilities operating in the United States. Per the U.S. Energy Information Administration (“EIA”) finding, U.S. generation from renewable energy sources is expected to rise from 20% in 2020 to 21% in 2021 and 22% in 2022, with contributions from new additions of solar and wind generating capacity.

Per EIA, 16.1 GW of new wind assets will be added in 2021 and 5.8 GW in 2022. The renewable assets owned by NextEra Energy Partners are predominantly wind assets. The firm currently has 4,855 MW of wind assets and 975 MW of solar assets in the renewable portfolio.

Dominion Energy (D - Free Report) is another utility that have extensive plans to expand wind assets. Its Coastal Virginia Offshore Wind project, after completion in 2026, will deliver up to 8.8 million megawatts per year of clean, renewable energy to the grid.

Zacks Rank

NextEra Energy Partners currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

In the past six months, units of NextEra Energy Partners have gained 16.1% compared with the industry’s 27.6% growth.

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