Canada’s Brookfield Renewablehas teamed with institutional backers to acquire US developer Urban Grid and its 20GW utility-scale solar and energy storage project pipeline in a landmark $650m deal, a clear signal the American clean energy market remains attractive to foreign investors despite its near-term challenges.
The addition of Maryland-based Urban Grid’s 13GW PV and 7GW storage portfolio gives Brookfield 31GW of capacity under development and elevates the group into the top ranks of US renewables players.
Urban Grid will continue as an independent power producer under its own brand name in recognition of its strong brand presence. The company’s advanced stage projects are in the mid-Atlantic, Midwest and Southeast.
The takeover target had nearly 2GW of capacity under construction or ready-to-build and 4GW of “de-risked advanced state buildout opportunities”, according to Brookfield, which is 60% owned by Toronto-based investment house Brookfield Asset Management.
“Urban Grid’s team not only deepens our development capabilities, but it also provides strategic access to key US markets, serving as the perfect catalyst to accelerate Brookfield Renewable’s growth,” said Mitch Davidson, CEO of Brookfield’s US business.
Frank DePew, his counterpart at Urban Grid, said Brookfield is the right home given that its “collaborative culture and entrepreneurial spirit match our DNA”.
The US solar industry faces headwinds this year including construction delays due to supply chain bottlenecks; growing installation costs because of inflationary pressures and logistical challenges; federal legislative uncertainty with tax credit amounts and rates, and rising inflation that will lead to higher cost of capital.
Also impacting solar development, although not as much as wind, are lengthy interconnection queues and uncertain costs to upgrade existing grid infrastructure to wire in projects.
All this is pressuring margins at small- and medium-size project developers, some of whom are also experiencing problems financing certain projects due to tax equity market access.
Nonetheless, the US Energy Information Administration recent forecast that the country would in 2022 will install more utility PV capacity than wind for the first time in a calendar year – 21GW versus 7GW.
