TEL AVIV, Israel, Sept. 16, 2020 /PRNewswire/ -- OPC Energy Ltd. (TASE: OPCE) ("OPC"), Kenon Holdings Ltd.'s (NYSE: KEN) (TASE: KEN) ("Kenon") subsidiary today reports a strategic step, which puts it in significant activity in the US energy market. The company has signed a letter of intent to acquire control of an American company CPV, with an estimated investment of $ 700-800 million, part of which is also intended for investment in future projects of CPV. The deal is still subject to a number of approvals, and to the completion of the negotiation process between the parties.
Giora Almogi, CEO of OPC Energy said: "We have long recognized the potential inherent in the US electricity market, with an emphasis on expanding operations into the field of renewable energies. We see the US market as one of OPC's strategic target markets. There is growing momentum for increased development of renewable energy and a focus on a lower carbon approach to electricity supply. In parallel, the trends continue with a modernization of the grid with coal and uneconomic nuclear assets being retired and the construction of efficient, highly flexible natural gas power plants for economic and environmental reasons.
"We have been working for the past year to find a suitable platform to enter the American market, with one of the important criteria being that the American company has strong management with proven experience, and has accumulated significant projects for continued growth.
"After completing an in-depth search process, as mentioned, we are pleased to report today a letter of intent for the acquisition of CPV. It is a pioneering company in its field, dynamic and growing, operating throughout the United States in the largest and most significant electricity markets. The company has proven entrepreneurship and development capabilities, and since its inception it has initiated and built power plants with a total installed capacity of approximately 14,800 MW, of which approximately 9,950 MW of conventional stations in several markets, and wind-based power plants with a total capacity of approximately 4,850 MW. The company currently has a qualitative accumulation of an additional 2,245 MW for the construction of stations in the fields of renewable energy. The company currently owns interests in 5 natural gas-based power plants that have been established in recent years with the most advanced technology. The Company's operations include the management of 14 properties in a number of markets for its own accord as well as for third parties, with the ability to operate in any major market in the United States.
"The acquisition, when completed, CPV will become OPC's investment and expansion platform in the United States, and will help the company grow and expand its operations while diversifying the company's revenue sources into a number of areas, regulations and states. The U.S. electricity market includes about 1,100 GW of installed power. The U.S. market as a whole is undergoing a process of changing the energy mix which includes a significant replacement of coal by natural gas, as well as the entry of renewable energies. These trends are based on environmental regulation that limits pollution of power plants, regulation that favors renewable energy, low gas prices that push coal stations, and are derived from the older age of coal plants in the US (average about 40 years). This trend is gaining momentum in ISO-NE states in the northeastern United States (New York, New Jersey, Illinois, Massachusetts, Connecticut, Maryland, etc.) on the basis of local regulation with renewable energy targets and substantial restrictions imposed on greenhouse gas emissions.
Due to these trends, the Energy Information Agency expects that about 130,000 MW of coal-fired power plants and power stations based on fuel oil and diesel will close by 2030. On the other hand, the agency expects the construction of over 230,000 MW (wind and solar).
"The deal also puts OPC directly into the areas of green energy, and especially into the areas of solar energy and wind energy, which are marked as part of its and CPV's significant growth engines, in parallel with its natural gas stations."
The Company's activities include: (1) development and construction of conventional power plants and renewable energy; (2) ownership and maintenance of a portfolio of active power plants; (3) Power plant management for the company and third-party customers
CPV's development activity includes the successful execution of 44 projects with a total capacity of approximately 14,800 MW over the last two decades. In addition, the company has accumulated new projects with about 6,200 MW of capacity, of which about 2,245 MW in the field of renewable energy, with over 1,100 MW of which are in advanced stages of development. In the field of conventional energy, the company has 4 projects based on natural gas in various technologies at various stages of development with a total capacity of 3,955 MW.
The company's portfolio includes holdings, together with partners, in 6 active power plants based on natural gas and wind energy, located mostly in the northeastern United States in key markets (PJM, NYISO, ISO-NE). All conventional projects are new, based on the most advanced technology, with the highest efficiency in the market, giving the company a long-term competitive advantage as the US moves toward a lower carbon future.
Under asset management activities, CPV manages 14 power plants for its own accord as well as for third parties with a total installed capacity of approximately 10,600 MW in various technologies and markets, including the California and Texas.
OPC notes that its holding in the acquired company may be about 70%, and that it intends to bring in a number of institutional investors from the Israeli capital market as partners in the transaction, and at the time of the report is negotiating with Migdal, Clal and Poalim Capital Markets in this regard.
For the purpose of financing the transaction, it is expected to be based on raising capital and / or raising debt (public, private or banking) and / or cash balances, or a combination of them. Kenon Holdings, which controls OPC, informed the company that if it was offered to participate in such capital raising, it would seriously consider participating in it.
CPV (Competitive Power Ventures) is one of the leading companies in the American electricity market with significant activity of initiating, developing, constructing and maintaining power plants in the Northeastern United States in the attractive markets PJM, NYISO, ISO-NE which supply electricity to about 100 million inhabitants. These markets cover the states of New York, New Jersey, Pennsylvania, Ohio, Massachusetts, Virginia and Maryland, among others. In addition, the company also operates in the attractive markets of Texas and California.
The company has been operating since 1999 with proven experience in initiating, developing, financing, establishing and managing conventional and renewable power plants. The company is headquartered in Boston and Washington. The company is run by Gary Lambert, who is also one of its founders, and it employs about 90 people. In recent years, the company has regretted the values of sustainability, green investments and ESG (Environmental, Social, Governance), which guide all the projects in which it is involved.
The company's initiation and development activities include the successful implementation of 44 power plants in various technologies (wind, mazam, open cycle) with a total installed capacity of approximately 14,803 MW in a variety of markets in the United States. The company has successful experience in the development of stations based on natural gas with a total installed capacity of approximately 9,953 MW in several markets, including: PJM, ISO-NE, NYISO, CAISO. These projects are based on the most advanced technology. The company is currently promoting 4 conventional projects that are in various stages of development with a total installed capacity of approximately 3,995 MW.
The renewable energy development and development activities include the successful implementation of 31 wind farms with a total installed capacity of about 4,850 MW in various countries in the US. A large part of this activity has been sold over the years to the world's leading energy companies including Iberdrola, Dominion, PG&E, Duke Energy Invenergy and other companies. Today, the company has accumulated renewable energy projects in various stages of development with a total installed capacity of about 2,245 MW. Most of the project accumulation is based on solar energy (about 2,000 MW) and the rest in wind energy. The dynamics in the Northeastern United States, and in additional markets for which a significant increase in the installed capacity of renewable energies is expected in the next decade.
The company currently owns, together with partners, 5 active power plants, powered by natural gas, with a total capacity of approximately 4,045 MW (the company's share - approximately 1,290 MW). These stations are the newest on the market, with the oldest station in the station fleet starting in 2016, and the newest station starting in December 2019. The stations are based on the most advanced integrated cycle technology, with high efficiency, and meeting the highest environmental standards. These stations are in the markets PJM, NYISO, ISO-NE. In addition, the company owns, together with partners, a similar power plant whose construction began in August 2020. This station will operate in the Chicago area with a total installed capacity of approximately 1,258 MW. The station is expected to begin operations in 2023. The company's share in the project is expected to stand at 10%.
In addition, the company owns an active power plant, based on wind energy, with a total capacity of approximately 152 MW (part of the company - approximately 106 MW).
The asset management area includes the management of 14 power plants with a total installed capacity of approximately 10,600 MW. The company manages the 7 projects that the company owns (including the management of the construction process of the station currently under construction) with a total installed capacity of approximately 5,455 MW. In addition, the company manages 7 properties for third parties (holding companies and investment funds) with a total installed capacity of approximately 5,140 MW. The company operates in a number of significant power markets, in addition to major operating markets, which include the CAISO (California Power Market) and the Texas Power Market.
OPC Energy Ltd. is the first and leading private electricity company in Israel engaged in the initiation, development, construction and operation of power plants, as well as electricity generation and supply to private customers and the IEC. The company owns 80% of the Mishor Rotem power plant project, in 100% in the Hadera power plant project, and 100% in the Tzomet power plant project, which is under construction.
OPC Energy published its financial results for the first half of 2020 last month. The company ended the half with revenues of NIS 577.5 million, and with EBITDA of NIS 133.7 million. The company's shareholders' equity, as of the end of the first half of the year, amounted to NIS 810.6 million (NIS 751.8 million attributed to shareholders), and the company's cash, according to the consolidated balance sheet, has cash and deposits totaling NIS 902.5 million.
At the beginning of last July, the commercial period of operation of the power plant set up by OPC in Hadera began, with a total volume of approximately 144 MW.
Tzahi Goshen, CFO, OPC Energy
SOURCE OPC Energy Ltd