Canadian energy company Capital Power said it was acquiring two U.S.-based natural gas-fired generation facilities in California and Arizona for a net cost of $1.1 billion.
Capital, like some of its rivals, is aiming to increase its power generation through greenhouse gas emissions-free renewables as well as more stable, but polluting energy sources such as natural gas.
This month, Canadian rival TransAlta said it would acquire Heartland Generation, which produces power from natural gas.
Following the completion of the deal, Capital will become the fifth largest non-regulated gas-powered generator in North America from ninth position. It plans to be net-zero emissions by 2045.
The acquisition is expected to generate around $265 million in core profit for the 2024-28 period, and is estimated to be 8% accretive. The deal is expected to close in the first quarter of 2024
The La Paloma natural gas-fired generation plant in Kern County, California has a capacity of 1,062 megawatts (MW) and is owned by CXA La Paloma.
The Harquahala natural gas-fired generation facility in Maricopa County, Arizona has a capacity of 1,092 MW, and is owned by New Harquahala Generation Company, a newly formed and equal-weighted partnership between Capital Power Investments and a fund managed by BlackRock’s Diversified Infrastructure business.
“The acquisition of La Paloma and the partnership in Harquahala offer an attractive entry point in the WECC (Western Electricity Coordinating Council) market, are immediately accretive and maintains our investment grade credit ratings and balance sheet strength,” said Sandra Haskins, CFO of Capital Power.
Alberta-based Capital Power generates power from natural gas, wind, solar and other sources at sites in Canada and the United States. It has 62% of its capacity in Canada and 38% in the U.S.
