(Reuters) - Utility firm Duke Energy said on Wednesday it would sell its commercial distributed generation business to private equity firm ArcLight Capital Partners in a $364 million deal.

The business includes operating assets of REC Solar, which Duke had acquired in 2015, development pipeline and operations and maintenance portfolio, as well as distributed fuel cell projects managed by Bloom Energy.

Duke said it expects about $259 million of proceeds from this sale, which the company would use to help incorporate more than 30,000 megawatts of regulated renewable energy into its system by 2035.

Electric utilities in the United States are streamlining their operations to shift away from fossil fuels toward cleaner energy sources, including solar and wind, to meet climate goals.

Duke's peers such as FirstEnergy and NiSource have also sold stakes in their subsidiaries this year as they seek to invest in cleaner sources of energy.

"The sale of commercial renewables businesses streamlines our portfolio and provides the resources to support our growing regulated territories," said Duke President and CEO Lynn Good.

The deal is expected to close by the end of 2023.

(Reporting by Tanay Dhumal in Bengaluru; Editing by Shilpi Majumdar)