Pattern Energy to acquire North Kent Wind project

The San Francisco-based yieldco will acquire the Canadian power plant from its parent, who along with Samsung is developing the 100MW project.

Pattern Energy has added the North Kent Wind project to its list of identified right of first offer (ROFO) projects from Pattern Development (Pattern Energy Group LP), a company backed by private equity firm Riverstone Holdings and parent of Pattern Energy.

“Pattern Energy expects to acquire an owned interest of 43 megawatts (MW) in the 100MW North Kent Wind project,” which is located in Chatham-Kent, Ontario, the San Francisco-based company said in a statement on Tuesday.

“The project has not yet been acquired,” a spokesperson for Pattern Energy said in an e-mailed response, adding that the acquisition price and other financial terms will be announced once the transaction is finalised.

Pattern Development is developing the project in partnership with Samsung Renewable Energy. Construction of the project is expected to begin by the end of 2016, while completion is slated for the end of 2017.

In a separate statement, Pattern Development also announced the signing of a 20-year power purchase agreement with the Independent Electricity System Operator (IESO).

“We appreciate the support we have received from Chatham-Kent for this project, which will provide many benefits in the Municipality including job creation, business for local contractors, property tax revenue, and a $4 million community benefits contribution,” Pattern Development president and chief executive Mike Garland said in the statement, referring to the $4 million his company and Samsung will be contributing to the municipal council, which will have sole discretion for allocation of the funds.

In addition, the municipality will also have the option to purchase a 15 percent equity interest in the project. Once completed, the North Kent Wind farm will generate enough clean energy to power 35,000 homes in Ontario, according to the statement.

The project falls under Samsung's $5 billion Green Energy Investment agreement, an initiative the South Korean conglomerate has launched with other partners to create the world’s largest cluster of wind and solar power in Ontario.

The announcements come just weeks after Pattern Energy said it would be acquiring K2, another Ontario wind farm, from its parent company, bringing Pattern Energy’s ROFO list of projects to nine and its total owned capacity to 930MW. “The list of ROFO projects represents a portion of Pattern Development’s 4,500MW pipeline of development projects, all of which are subject to Pattern Energy’s right of first offer,” according to the statement.

A yieldco of Pattern Development, Pattern Energy raised net proceeds of $319 million when it initially listed in September 2013. It is described as a “different” type of yieldco, as it was designed to become a fully-fledged project developer – and not just an owner of operational assets, as most yieldcos are – once its market capitalisation hits $2.5 billion, according to a report from law firm Chadbourne & Parke.

When that happens, the yieldco will inherit the workforce of its parent company. It also has an option to buy its parent company should its current owners decide to sell a significant portion of its equity or assets.

New York-based Riverstone invested in Pattern Development in June 2009 but has not disclosed the ownership interest it holds in the company.

Since being established in 2000, the private equity firm, which focuses on the power and energy sectors, has raised more than $28 billion of equity capital and committed approximately $28 billion to 114 investments in North America, Latin America, Europe, Africa and Asia.

The firm conducts buyout and growth capital investments in the exploration and production, midstream, oilfield services, power and renewables sectors.