Enbridge sells 49% interest in renewable power assets for $1.75 billion to Canada Pension Plan

Enbridge and CPPIB entered into an agreement to form a 50-50 joint venture to pursue future European offshore wind projects

Enbridge Inc. entered into agreements with the Canada Pension Plan Investment Board (CPPIB) to sell a 49 per cent interest in select North American onshore renewable power assets, as well as 49 per cent of Enbridge’s interests in two German offshore wind projects (Hohe See, and related expansion) through a newly created joint venture with CPPIB, for CAD$1.75 billion, according to a press release.

The assets being contributed by Enbridge to the joint venture include all of Enbridge’s Canadian renewable power assets, held through Enbridge Income Fund, as well as two U.S. assets, the Cedar Point Wind Farm in Colorado and the Silver State North Solar Project in Nevada.

Enbridge expects to retain its interests in certain other U.S. renewable power assets, which may be monetized or sold at a later date.

Under the terms of the agreements, CPPIB will fund its 49 per cent pro-rata share of the remaining construction capital required to complete the Hohe See projects (offshore Germany), which are scheduled to come into service at the start of 2020. This additional capital commitment is estimated at approximately CAD$500 million, bringing CPPIB’s total commitment to approximately CAD$2.25 billion.

Enbridge and its affiliates will continue to manage, operate and provide administrative services for the renewable power assets.

“The monetization of $1.75 billion of renewable assets through our newly formed joint venture with CPPIB is an important step in achieving the objective we set when we rolled out our three-year plan and strategic priorities in Dec.,” said Enbridge CEO Al Monaco.

This deal makes a significant contribution to our $3 billion asset sales target for the year and will also eliminate $500 million of equity capital requirement that we had previously included in our funding plan. This transaction, in addition to our other funding actions taken since April, accelerates funding for our secured capital program and gives us increased financial flexibility.”

Enbridge and CPPIB have also entered into an agreement to form a 50-50 joint venture for the pursuit of future European offshore wind projects. These projects may be in the early development, late development, construction or operational phase.

“We are also very pleased to be partnering with CPPIB in future development of our European offshore wind business, which we believe will have great opportunities for years to come,” said Monaco.

“The combination of our operating and development capability with CPPIB’s resources and experience creates a powerful Canadian champion for developing offshore renewable energy projects in Europe.”

Each of the North American and German sale agreements is subject to closing adjustments and conditions customary in transactions of this nature.

Closing is expected to occur during the third quarter of 2018 subject to the receipt of all necessary regulatory approvals and consents. Enbridge anticipates a minimal amount of cash taxes arising from the sale of these renewable assets.