AES Closes $2.0 Billion in Non-Recourse Financing for 1.4 GW Southland Repowering Project in Southern California
The AES Corporation (NYSE:AES) today announced the closing of $2.0 billion in long-term, non-recourse financing for its 1,384 MW Southland repowering project in Southern California. The financing consists of $1,475 million of senior secured notes amortizing through 2040 and a $492 million senior secured term loan amortizing through 2027, with a combined weighted average cost of debt of approximately 4.5%. AES will contribute approximately $350 million in equity to finance the balance of the total project cost of $2.3 billion.
“The $2.3 billion Southland repowering project is a key component of our strategic objective of increasing our U.S. Dollar-based, long-term contracted position,” said Andrés Gluski, AES President and Chief Executive Officer. “This project will provide Californians with clean and reliable energy by integrating 1,284 MW of efficient combined cycle natural gas generation with 100 MW of advanced battery-based energy storage.”
“Without the support of our stakeholders, including the lenders and regulatory authorities in California, it would not have been possible for AES to achieve this significant milestone,” said Tom O’Flynn, AES Executive Vice President and Chief Financial Officer. “This transaction is one of the first project financings for battery-based energy storage, demonstrating once again AES’ leadership in the energy storage industry.”
In 2014, under a competitive bidding process, AES was awarded 20-year Power Purchase Agreements (PPAs) by Southern California Edison (SCE), to provide 1,284 MW of combined cycle gas-fired generation and 100 MW of four-hour duration, battery-based energy storage. Under the PPAs, one hundred percent of the capacity will be sold to SCE in exchange for a fixed monthly capacity fee that covers fixed operating cost, debt service and return on capital. In addition, SCE will reimburse variable costs and provide the natural gas and charging electricity.
The gas-fired capacity will be constructed by Kiewit Power Constructors Co. (Kiewit) under fixed-price, date-certain, turnkey Engineering, Procurement and Construction contracts. Kiewit is one of North America’s largest engineering and construction contractors, with more than 130 years of experience delivering projects in various sectors, including extensive involvement in power-related projects.
Construction has already begun at AES’ Huntington Beach site and will be initiated at its Alamitos site in early July 2017. Commercial operation for the gas-fired capacity is expected in 2020 and for the energy storage capacity in 2021.
AES currently has a total of 3,941 MW of gas-fired capacity operating at its three Southland facilities: Alamitos (2,075 MW), Redondo Beach (1,392 MW) and Huntington Beach (474 MW). These facilities are expected to retire by the end of 2020. AES has also permitted 600 MW of additional capacity at Alamitos and Huntington Beach and is ready to respond to future solicitations if additional resources are needed in Southern California.
The AES Corporation (NYSE:AES) is a Fortune 200 global power company. We provide affordable, sustainable energy to 17 countries through our diverse portfolio of distribution businesses as well as thermal and renewable generation facilities. Our workforce of 19,000 people is committed to operational excellence and meeting the world’s changing power needs. Our 2016 revenues were $14 billion and we own and manage $36 billion in total assets. To learn more, please visit www.aes.com. Follow AES on Twitter @TheAESCorp.
Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’ current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.
Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’ filings with the Securities and Exchange Commission (the “SEC”), including, but not limited to, the risks discussed under Item 1A “Risk Factors” and Item 7: Management’s Discussion & Analysis in AES’ 2016 Annual Report on Form 10-K and in subsequent reports filed with the SEC. Readers are encouraged to read AES’ filings to learn more about the risk factors associated with AES’ business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Any Stockholder who desires a copy of the Company’s 2016 Annual Report on Form 10-K dated on or about February 27, 2017 with the SEC may obtain a copy (excluding Exhibits) without charge by addressing a request to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. A copy of the Form 10-K may be obtained by visiting the Company’s website at www.aes.com.