Masdar closes acquisition of 50 per cent stake in Terra-Gen

Abu Dhabi Future Energy Company (Masdar) on Tuesday announced the closing of its acquisition of a 50 per cent stake in Terra-Gen Power Holdings II, one of the largest independent renewable energy producers in the United States, from Energy Capital Partners (ECP).

ECP, one of the largest private investors in power and renewable assets in the United States, has fully exited its position in Terra-Gen in connection with the closing of the transaction. Igneo Infrastructure Partners (Igneo), a global infrastructure investment manager, retains its existing 50 per cent stake in Terra-Gen.

Representing one of Masdar’s largest transactions, the deal further cements Masdar’s position in the US.

Masdar first entered the US market in 2019 and has a proven history of funding, developing, owning and operating clean energy projects in the country.

Before the Terra-Gen acquisition, its US portfolio of utility scale wind, solar and storage assets had a generating capacity of more than 1.4GW.

The US market and Terra-Gen’s scalable platform will play important roles as Masdar executes its plan to build 100GW of capacity in its global renewable energy portfolio by 2030.

Terra-Gen’s gross operating portfolio currently comprises 3.8GW of wind, solar and battery storage projects, including 5.1GWh of energy storage facilities across 30 renewable power sites throughout the US, predominantly in California and Texas.

Terra-Gen is currently developing more than 12GW of wind, solar and battery storage projects in the US Its development activities include projects in California, Texas and New York. The project pipeline includes 386MW of Texas wind and California solar, and 512MWh of California energy storage facilities, with commercial operations anticipated in 2025.

Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology, COP28 President and Chairman of Masdar, said, “The UAE and US have long been partners in efforts to advance clean energy, a collaboration culminating in the Partnership for Accelerating Clean Energy (PACE) agreement. Masdar has a strong track record of supporting US renewable energy projects, and the acquisition of Terra-Gen reaffirms this long-standing commitment.

We are now on target to surpass our goal of having 10GW of integrated renewable generation capacity in the US by 2030. This transaction unlocks further economic opportunities from green growth, and aligns with the global ambition to triple renewable energy capacity, in line with the historic UAE Consensus reached at COP28.”

Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, said, “Terra-Gen’s experienced management team and scalable platform make it the ideal partner, as we work to increase our presence and investment in the US as part of Masdar’s commitment to a long-term strategy in this important market. We look forward to partnering with Igneo to enhance Terra-Gen’s capabilities and position it as a leading developer, owner and operator of reliable and clean renewable energy in the US.”

Jim Pagano, CEO of Terra-Gen, said, “The finalisation of this deal cements a strong relationship between Masdar and Terra-Gen. Masdar is a great partner for Terra-Gen because of our shared focus on developing clean energy projects and our commitment to decarbonisation. We look forward to working with them to expand and build on our pipeline of US projects.”

Niall Mills, Managing Partner and Global Head of Igneo, said, “Terra-Gen has been a strong platform for Igneo in the US since our investment in 2020. We see tremendous potential to continue driving growth and creating long-term value in the US renewable power sector through the capable and experienced team at Terra-Gen, and we look forward to partnering with Masdar on this exciting next phase of expansion.”

Established in 2006, Masdar has a long-standing commitment to advancing renewable energy projects across the globe.

The purchase of a 50% share in Terra-Gen represents another significant milestone as the company works to support the target set in the historic UAE Consensus to triple global renewables capacity by the end of this decade.

Masdar’s commitment to the US market reflects the UAE’s strong ties to the country.

In January 2023, UAE and US officials announced that US$20 billion will be allocated to fund 15GW of clean energy projects in the US before 2035, led by Masdar and a consortium of US private investors, under the Partnership for Accelerating Clean Energy (PACE) between the two countries.

Lazard and Guggenheim Securities are serving as financial advisors, and Latham & Watkins LLP is serving as legal advisor to Terra-Gen.

BMO Capital Markets and JP Morgan are serving as financial advisors, and White & Case LLP and Covington & Burling LLP are serving as legal advisors to Masdar.

WAM