Talen Energy divests renewables business

The Riverstone-backed independent power producer is selling a portfolio of 25 projects to Energy Power Partners.

Talen Energy, one of the largest independent power producers in the US, has agreed to sell its renewable energy business to funds managed by California-based Energy Power Partners, a private equity firm focused on renewables and clean energy.

The sale of Talen Renewable Energy includes 25 projects in the landfill gas-to-energy, solar, wind and cogeneration sectors. Located in Pennsylvania, New Jersey, Vermont, and New Hampshire, they have a combined generating capacity of 65 megawatts (MW), Talen Energy said in a statement. It did not disclose financial details of the deal.

“It was a small business that really didn’t match up with Talen Energy’s business model,” George Lewis, a spokesperson for the company, told Infrastructure Investor. “We’re looking for larger utility-scale projects.”

News of the sale comes soon after Talen Energy was officially launched. In June 2014, Pennsylvania-based utility group PPL and Riverstone Holdings, a private equity firm focusing on the energy and power sectors, announced their joint plans to create Talen Energy by spinning off PPL’s power generation business and combining it with that of Riverstone.

Upon completion of these transactions PPL shareholders owned 65 percent of Talen Energy’s common stock, affiliates of Riverstone owned the remainder, and the company had 15,000MW of generating capacity, primarily in two of the largest power markets in the US – PJM (Mid-Atlantic) and ERCOT (Texas).

Because of its size, one of the conditions set by the Federal Energy Regulatory Commission (FERC) for Talen Energy to be established was that the company divest approximately 1,300MW in a specific region of PJM.

“We have until June 1, 2016 to determine how we’re going to comply with the FERC divestiture order to meet their power market issues that they raised in their review of the deal with Riverstone,” Lewis explained.

Talen Energy was officially launched on June 1 and began trading on the New York Stock Exchange on June 2 under the symbol TLN.

New York-based Riverstone was established in 2000, having raised $29 billion of equity capital since inception. It has committed approximately that amount to over 110 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 renewable sectors.

Independent fund manager EPP makes project equity investments in the renewable and clean energy sector, targeting small- to mid-sized base load renewable power projects with contracted cash flows and long-term capital appreciation.