Partners Group, one of the largest firms in the global private markets industry, acting on behalf of its clients, has officially announced an agreement to acquire PowerTransitions, a utility-scale power developer in the US, from EnCap Investments.
Under the agreed terms, Partners Group will effectively invest over USD 450 million of capital to accelerate the company’s future growth.
“PowerTransitions will play a critical role in meeting power demand in the US by increasing grid capacity and improving reliability by optimizing underutilized points of interconnection. We have strong thematic conviction in the Company’s strategy of co-locating renewables with legacy power assets and plan to accelerate its growth through expanding its operating asset base while continuing to re-develop non-operating sites. We look forward to working with the experienced management team on our value creation plan,” said Ed Diffendal, Partner, Co-Head Infrastructure Americas at Partners Group
For better understanding, PowerTransitions is best-known for acquiring and redeveloping legacy or retiring thermal power assets with existing grid connections that, on their part, can be enhanced or modified to install new generation through the co-location of solar and/or battery energy storage systems. Moving forward, the company is set to procure a 226 MW seed portfolio of natural gas plants. Alongside that, PowerTransitions has also identified a 3 GW pipeline of thermal power assets in constrained markets across the US that hint at aligning with its core strategy.
Beyond this, the company will get to tap into several thematic tailwinds as an aging energy infrastructure in the US is enroute to deal with bolstered power demand from the expansion of data center capacity, the re-shoring of manufacturing, and electrification of the economy.
You see, from a statistical standpoint, such an unprecedented growth in demand will mandate no less than 130 GW of new power generation capacity in the next five years. Now, while a multi technology’ approach is the only way out of it, permitting and interconnection delays are making it significantly difficult to develop capacity on greenfield sites.
In response, PowerTransitions’ approach of redeveloping, as well as optimizing legacy and retiring sites should prove useful to meet this growing demand.
In the present context, Partners Group will actively collaborate with PowerTransitions management team on a transformational value creation plan, deploying several key initiatives. These initiatives include adding co-located renewables and energy storage systems across the seed portfolio, acquiring more thermal power assets, and commercializing co-located renewables and thermal assets as a bundle or as standalone projects.
Among other things, we ought to mention how PowerTransitions is only the second power investment Partners Group has signed in the US this year to-date. Back in March, the company had also acquired a 1.9 GW portfolio of natural gas-fired power plants operated by Middle River Power.
In case you weren’t aware, Middle River Power is currently in the process of developing on-site battery energy storage systems at these power plants to store energy which can be eventually discharged when needed, reducing the overall carbon footprint of the plants, all while simultaneously enhancing reliability.
Making this deal all the more critical would be Partners Group’s own stature. Basically, the company’s rise up the ranks stems from its investment programs and custom mandates that cover private equity, private credit, infrastructure, real estate, and royalties. The company’s excellence in what it does can also be understood once you consider it has, at the moment, over USD 150 billion worth of assets under management globally.
“Our strategy allows for the avoidance of network upgrade costs and long queues thus shortening development timelines and costs, easing Independent System Operators’ and Regional Transmission Organizations’ desire to enable new power generation to provide grid reliability. This strategy addresses major roadblocks hindering the matching of rising power demand in the US with clean, reliable, and economic power supply. We believe aged or retired thermal and industrial sites represent a large, underutilized pool of assets with significant value creation potential and we have identified a robust pipeline of actionable near-term M&A opportunities,” said Sean Long, Chief Executive Officer at PowerTransitions,
