Pattern Energy has acquired interests in the two wind projects that comprise the 324-MW Broadview Wind power facilities, and the independent 35-mile, 345-kV Western Interconnect transmission line. Broadview Wind, which is located 30 miles north of Clovis, New Mexico, commenced commercial operations in late March.
The project were acquired from Pattern Development for $269 million, with a cash consideration of $215 million and an assumed project loan of $54 million. The cash consideration was funded from available corporate liquidity.
“This extraordinary project brings inexpensive renewable power from eastern New Mexico, one of the highest wind areas in the west, using dedicated transmission capacity from several transmission systems into California,” said Mike Garland, President and CEO of Pattern Energy. “Broadview’s production complements production from California’s domestic renewable resources helping California transition to a carbon-free, low-cost, renewable grid.”
Broadview consists of 141 Siemens’ 2.3 MW wind turbines and has the capacity to generate 324 MW of energy — the power equivalent to the annual energy usage of approximately 180,000 California homes. Broadview is limited to 297 MW of injection capacity at Broadview’s transmission interconnection point.
Broadview interconnects to the Western Interconnect transmission project, a 345-kV transmission line, about 35 miles in length. To wheel the output from Broadview to the California Independent System Operator system where it is delivered to SCE, Broadview has entered into long-term, firm, point-to-point transmission service agreements to move the output through the Western Interconnect, Public Service of New Mexico and Arizona Public Service transmission systems.
“We are especially excited to bring this project on line because Pattern Development is actively developing several significant opportunities in New Mexico and the southwest U.S. as part of the region’s increasing demand for low-cost, renewable energy. These new opportunities will be subject to our ROFO as part of our relationship with Pattern Development.”
Pattern Energy expects Broadview and Western Interconnect to generate cash available for distribution (CAFD) of approximately $18 million in 2018, increasing each year by about $2.5 million per year generating an average of $23 million per year in CAFD over the five-year period starting in 2018 (which results in a CAFD multiple of 9.3 times, after taking into consideration the Western Interconnect loan).
Broadview has also entered into two 20-year power purchase agreements with Southern California Edison, which has a BBB+/A2 credit rating, for sale of 100% of the output, up to a total of 297 MW, which has been factored into Broadview’s economics.
Broadview will begin receiving both pay-as-you-go (PAYGO) contributions from Broadview’s tax equity investors and certain New Mexico production tax credits starting in 2018. Based on the expected timing of these cash flows and assuming normal wind conditions, Pattern Energy expects the CAFD contribution, after deduction of Western Interconnect financing costs, to be $18 million in 2018 and to increase approximately $2.5 million per year thereafter through 2022.
This results in a five-year average CAFD of $23 million per year and a 9.3x CAFD multiple, based on the cash consideration of $215 million paid to acquire Broadview and Western Interconnect.
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