First Reserve takes a plunge in the Caribbean

The energy investment specialist is partnering with Beowulf Energy in the acquisition of stakes in a power generation facility in Trinidad and Tobago (pictured) and a project transporting natural gas from Tobago to other Eastern Caribbean islands.

The energy infrastructure fund of First Reserve, the Connecticut-based fund manager, has invested an undisclosed sum in power generation and midstream assets in the Eastern Caribbean in partnership with Beowulf Energy, the New York-based energy infrastructure firm.

The deal sees First Reserve purchase a “substantial equity stake” from Beowulf in Trinity Power, a 225-megawatt (MW) contracted natural gas-fired power generation facility in Trinidad and Tobago. Beowulf will retain a stake and continue to manage the facility.

Trinity’s power purchase agreement (PPA) with the Trinidad and Tobago Electric Commission is contracted through 2029. The Commission’s obligations under the PPA, including supplying natural gas to fuel the plant, are backed by the Trinidad and Tobago government’s Baa/A rating.  

In addition, First Reserve and Beowulf will together acquire a “majority” stake in the Eastern Caribbean Gas Pipeline Company (ECGPC), which is at the planning stage for the construction of an under-sea pipeline to supply natural gas from Tobago to other islands in the Eastern Caribbean. Phase one of the project will see the pipeline connect Tobago and Barbados, and the second phase will extend the pipeline to other islands. 

A press release issued by First Reserve said the pipeline is expected to “significantly lower” the cost of electricity in Barbados, for example, where fuel oil is primarily relied on for electricity generation. The press release also said that, following financial close of debt financing for the pipeline, First Reserve will have an option to become majority owner of ECGPC.

“Trinity has historically performed very well and there is excellent visibility into long-term cash flows, given the contracts in place,” said First Reserve managing director Mark Florian. “The economic and environmental case for the pipeline is also very compelling, with the government and private sector participants aligned on the process to complete the project.”

The Eastern Caribbean investments are being made by way of First Reserve’s debut energy infrastructure fund, which closed last year on just over $1.2 billion. The firm also has a $9 billion private equity fund, which closed in 2009. 

Last month, First Reserve acquired a portfolio of four natural gas power plants from fellow US energy investment firm ArcLight Capital Partners. The same deal saw the $225 billion California Public Employees Retirement System (CalPERS) acquire an interest in a transmission line between New Jersey and New York’s Long Island – its second direct infrastructure stake.