January 26, 2022
Brookfield Renewable Partners L.P.
Acquires Urban Grid for $650 million
Our View: Modestly Positive
First impression:
Acquires Urban Grid for $650 million. Brookfield Renewable (BEP) announced that it has acquired (with its institutional partners) the renewable developer Urban Grid for $650 million. We estimate that initial net capital outlay for Brookfield Renewable is ~$163 million, assuming a 25% interest in the transaction. Although the initial capital outlay for BEP is modest relative to its size, we expect Urban Grid's development pipeline will lead to larger investment opportunities.
Adding 20 GW of development pipeline. Urban Grid's development pipeline of projects consists of ~13 GW of utility-scale solar and ~7 GW of energy-storage capacity located across 12 states. Founded in 2010, Urban Grid has focused on taking utility-scale solar and energy storage projects through the full development process, from site acquisition through to interconnection, permitting, and commercialization. Urban Grid will continue to operate under its brand name, advancing projects in its key markets including the U.S. mid-Atlantic, Midwest and Southeast. Urban Grid currently has nearly 2 GW of projects under construction or ready-to- build solar projects, with an additional 4 GW of de-risked advanced-stage build-out opportunities.
Growing U.S. development footprint. Following the transaction, BEP's U.S. development pipeline will triple to ~31 GW, making it one of the largest renewable developers in the country. BEP has typically relied on acquisitions of operating and development assets for growth, and the Urban Grid acquisition makes sense strategically, but we would need more information regarding the development pipeline. BEP has been growing its presence in the U.S., and over the past year, BEP and its institutional partners acquired Exelon's distributed generation business and the 845 MW Shepherds Flat wind facility in Oregon that is currently undergoing a repowering.