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Pattern Energy (PEGI) to Acquire Two Wind Power Facilities

Zacks Equity Research

Pattern Energy Group PEGI announced that it will acquire ownership interests in two operating wind power facilities — the Henvey Inlet Wind facility in Ontario and the Grady Wind facility in New Mexico — for $293 million.

The company also inked an agreement for a $260-million private placement of perpetual preferred stock with certain institutional investors. It intends to utilize a portion of the net proceeds to finance the two acquisitions.

The 300-MW Henvey Inlet Wind facility and the 220-MW Grady Wind facility have 20- and 25-year power purchase agreement, respectively. The buyouts will boost the company’s clean generation capacity and financial performance.

Expansion via Acquisitions

Pattern Energy is consistent with making acquisitions that are expanding its renewable portfolio. Moreover, the company completed North Kent and Belle River acquisitions that will enable it to meet 2019 and 2020 growth targets. These projects have remaining PPA life of 17 years and have strong credit profiles.

The decision to acquire two wind farms will also contribute to the company's 2019-2020 growth objectives. This will broaden its production portfolio by 13% to 4.4 Gigawatts of operational capacity across 28 renewable energy facilities.

Focus on Renewable Energy

Per U.S. Energy Information Administration (EIA), renewable energy sources will contribute 17% to total electricity generated in the United States in 2019 and its contribution will go to 19% in 2020. Adoption of wind energy is increasing in the United States. Per EIA, 12.2 Gigawatt (GW) of new wind power projects will be added in 2019. Also, 14.3 GW of wind projects is slated to be added in 2020 in the country.

In the second quarter of 2019, Pattern Energy had total production of 2,114 GWH, out of which 200 MW was from wind projects.

Also, other companies from the same space are trying to lower carbon footprint such as NextEra Energy NEE, WEC Energy WEC and Dominion Energy D.

More than half of NextEra Energy’s production is generated from wind energy. WEC Energy focuses on reducing carbon emissions by approximately 40% below 2005 levels by 2030 and 80% by 2050. Dominion Energy is also working on offshore wind projects, battery storage projects and hydropower projects to lower emission.

Zacks Rank & Price Performance

Pattern Energy currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Pattern Energy have returned 37% in the past 12 months compared with the industry’s growth of 13.2%.


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