Partners Group has agreed to acquire a portfolio of natural gas power plants in California from Avenue Capital Group, along with the operator of the plants, for $2.2 billion, and stands to benefit from power demand growth coupled with a need for improved grid reliability in the state.
The deal comprises 11 power plants with a combined capacity of 1.9 gigawatts and its operator, Middle River Power. The latter uses on-site battery energy storage systems at its gas-fired plants, creating hybrid energy centers that utilize surplus renewable energy to charge batteries, which can be discharged to improve grid reliability and reduce carbon emissions.
Switzerland’s Partners Group said it sees the deal as a way to capitalize on the increasing integration of renewable energy into the grid. It also plans to develop new hybrid energy centers, using Middle River—which manages around 4.8 gigawatts of third-party power generation capacity outside of California—as a model.
The firm, with around $150 billion in AUM, also recently invested in Green Flexibility, a German battery storage developer, underscoring its focus on developing an infrastructure platform with a strong business model and execution strategy.
Avenue Capital Group acquired assets including three gas power plants from AltaGas in 2018 for $300 million, having previously established Middle River Power in 2016 to manage and develop power generation assets.
Guggenheim Securities, Morgan Stanley and Latham & Watkins advised Avenue Capital on the transaction. Davis Polk & Wardwell advised Partners Group.
Featured image by Vithun Khamsong/Getty Images
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