DCR Transmission, a joint venture established by energy-focused private equity firm Starwood Energy and Spanish developer Abengoa, beat out four other teams to become the preferred sponsor for the Delaney to Colorado River transmission line, the two companies said in a statement.
The California Independent System Operator (CAISO), which manages the flow of electricity across the long-distance power lines that comprise 80 percent of California’s and a small part of Nevada’s power grid, selected DCR Transmission to finance, construct, own, operate and maintain the 114-mile, 500 kilovolt (kv) line that will reinforce electrical interconnection between California and Arizona.
The project, expected to reach commercial operation in 2020, is estimated to cost $300 million, according to the statement.
Starwood is the majority shareholder in the joint venture, owning 75 percent, while Abengoa holds the remaining 25 percent, a spokesperson for the private equity firm told Infrastructure Investor, but declined to comment on how much each party would be investing in the project.
“We are very gratified by CAISO’s thorough process, analysis and decision in the selection of our joint venture as the sponsor of this new transmission project,” said Himanshu Saxena, Starwood Energy’s managing director.
“This new award will help us to accelerate our development in the power transmission market in the United States, where we expect to continue leveraging our global expertise in order to become a significant player in development, engineering, construction and maintenance of large transmission assets,” added Santiago Seage, chief executive of Abengoa.
Headquartered in Greenwich, Connecticut, Starwood Energy is an affiliate of private real estate investment firm Starwood Capital Group. The firm invests primarily in natural gas, renewable electricity generation and power transmission with equity investments typically ranging from $25 million to $100 million or more.
Starwood Energy has raised two general opportunity funds, the most recent – Starwood Energy Infrastructure Fund II (SEIF II) – closing on $983 million in January 2014 and beating its initial target of $750 million. SEIF II will target renewable energy assets in North America.
Its predecessor, Starwood Energy Infrastructure Fund I held its final close on total commitments of $483 million. The fund has invested in projects such as the Hudson Transmission Project, a 600-megawatt (MW) transmission line in New Jersey; the 69MW Starwood SSM Project, a solar photovoltaic plant in Ontario, Canada; the Starwood Midway, a 120MW simple-cycle peaking plant in California; and the 272MW Thermo Facility combined-cycle power plant in Denver, Colorado.
Through these two funds and other affiliated investment vehicles, Starwood Energy manages total equity commitments of more than $2 billion and has executed transactions totalling more than $4 billion in enterprise value.