Innergex Energía Renovable Inc. (TSX: INE) (“Innergex” or the “Company”) announces that it has reached an agreement to acquire 100% of the common shares of Aela Generación S.A. and Aela Energía SpA (both known as “Aela”), a 332 MW portfolio comprised of three recently built and operating wind assets in Chile for a purchase price of USD 686 million (CAD 871 million) (the “Acquisition” ), including the assumption of $386 million (CAD 490 million) of existing debt, subject to customary closing adjustments.[1]
Aela’s portfolio includes 332 MW of operating wind assets in Chile and is made up of the Sarco (170 MW), Aurora (129 MW) and Cuel (33 MW) wind farms (together, the “Plants”). Revenues from these Plants are based on two forms of power purchase agreements with 25 Chilean distribution companies, maturing at the end of 2036 and 2041.
“I am very excited about today’s announcement of the acquisition of Aela, a leading wind portfolio in Chile, which will significantly expand our presence in the country to 650 MW, as well as contribute to significant technological and geographic diversification. The Acquisition will enhance our leadership position in Chile, an attractive energy market,” said Michel Letellier, President and CEO of Innergex. “The acquisition of these newly built, high-quality assets is a continuation of our disciplined growth strategy in Chile, which we have implemented since our entry into that market in 2018, and allows us to take full advantage of our current portfolio in that country, as Together, the two will create cumulative refinancing opportunities, give us greater flexibility to serve our customers under power purchase agreements, and provide other operational improvements.”
An attractive renewable energy market
Chile is an attractive market for investment, as it is the first South American country to join the Organization for Economic Co-operation and Development (OECD) and has a solid investment rating according to rating agencies Standard & Poor’s (A), Moody’s (A1) and Fitch (A-). Chile also has the highest Gross Domestic Product (GDP) per capita in the region and the lowest public debt relative to GDP.
The Chilean government has created national decarbonization plans, which include the complete abandonment of coal as an energy source, starting with a reduction of 3.5 GW by 2025, with the goal of reaching carbon neutrality in 2050. The electricity grid The Chilean National Electricity Coordinator (“CEN”) forecasts that the demand for electricity will have a cumulative average increase of 3.4% between 2021 and 2041, while the average price of energy in the important Polpaico node reached an average of USD 80/MWh in 2021. These decarbonization goals and positive market indicators will require significant investments in the renewable energy sector in the coming years, and Innergex is well positioned to participate in the resulting growth.
A portfolio underpinned by recently built assets and long-term contracts in USD
The Acquisition adds 332 MW of operational wind capacity, of which 90% came online in 2020. The Plants have a long-term annual production average of 954 GWh and diversified revenue sources supported by two attractive forms of purchase agreements of long-term energy of up to 856 GWh per year, which can be covered by Innergex’s entire portfolio of assets in Chile. The 20-year contracts, signed in 2015 and 2016 and executed as of 2017 and 2022, respectively, still have a weighted average of 16 years remaining. These contracts, in US dollars, have an average rate for the first 12 months after closing of USD 93/MWh for 2022 and are fully updated with the increase in the US CPI, providing a hedge against inflation.
