Duke Energy to sell distributed generation business to ArcLight for $364 million

Duke Energy ArcLight

Duke Energy is selling its commercial distributed generation business to an affiliate of ArcLight Capital Partners LLC for an enterprise value of $364 million. The purchase agreement includes non-controlling tax equity interests.

Duke expects approximately $259 million of proceeds from this transaction, which is subject to certain customary adjustments and will be received upon closing.

This is Duke’s second major asset sale in the last month. In early June, the company reached a sale agreement to sell its utility-scale renewables business platform to Brookfield for $2.8 billion.

Duke expects to finalize the sales for its utility-scale and distributed generation businesses by the end of 2023 and will use the proceeds to strengthen its balance sheet and avoid additional holding company debt issuances associated with these assets.

These transactions will support Duke Energy’s focus on the growth of its regulated businesses, including investments to enhance grid reliability and help incorporate over 30,000 MW 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,” said Lynn Good, Duke Energy chair, president and CEO. “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.”

The distributed generation business being sold includes REC Solar operating assets, development pipeline and O&M portfolio, as well as distributed fuel cell projects managed by Bloom Energy. Employees of the distributed generation business will transition to ArcLight to maintain business continuity for its operations and customers.

“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,” said Marco Gatti, managing director at ArcLight. “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 sale is subject to satisfaction of customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Act. Regulatory approval by the Federal Energy Regulatory Commission will also be required for the sale of the Bloom Energy distributed fuel cell assets.

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