California-based PG&E is in talks with US private equity firm KKR to sell a minority stake in its power generation business.
The power company has been blamed for starting several wildfires in the state and is seeking funding to shore up its power grid.
PG&E is aiming to win regulatory approval to reorganize its massive hydroelectric system and collection of natural gas, solar and battery facilities into a new entity, Pacific Generation.
KKR plans to acquire a 49.9% stake in this subsidiary. The assets in question are valued at $3.5 billion.
PG&E Executive Vice President and Chief Financial Officer Carolyn Burke said: “After thoroughly evaluating all potential investors, we believe a strategic partnership with KKR will be highly beneficial to our customers by supporting investments in critical power generation and storage assets.” Contribute to clean, reliable energy and provide a path to lower rates.
“As we continue to build out our systems, we must accelerate infrastructure investments to ensure we can deliver safe, sustainable, reliable and affordable energy to our customers.
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“Having a strong strategic partner like KKR will help us balance California's portfolio of clean energy generation and intermittent renewable resources, such as hydroelectric and pumped storage, and mitigate wholesale market volatility. We will be well-positioned to support other energy storage assets as needed.”
PG&E expects the move will reduce customer rates by more than $100 million over 20 years, as Pacific Generation is likely to benefit from a superior credit rating and lower debt costs.
PG&E will retain majority ownership of Pacific Generation following the sale, and existing employees will continue to manage the generation assets.
The transaction is not expected to change the regulatory oversight of Pacific Generation's assets by the California Public Utilities Commission and the Federal Energy Regulatory Commission.
If KKR acquires Pacific Generation's stock, it will benefit from capital investment returns and electricity sales revenue.
The investment will be managed through KKR's Infrastructure Investments division, which manages $59 billion in assets.
Raj Agrawal, Partner and Global Head of Infrastructure, KKR, said: “With our long roots in California, deep commitment to sustainable investing and decarbonization, and long-term perspective on asset management, we are well-positioned to support Pacific Generation in this new space. ” Chapter.
“We are confident that this transaction, if it moves forward, will benefit these facilities, the employees who operate them, and the people of California.”
In March 2024, KKR agreed to purchase a controlling interest in Avantas, a US company specializing in large-scale solar power and energy storage projects since 2009.
Following the acquisition, KKR and existing investor EIG will become the sole shareholders of Avantus.
