The AES Corp.
) announced that it has struck a deal with
) to divest 50% of its interest in the 336 megawatt (MW) solar
photovoltaic (PV) projects owned by Silver Ridge Power, LLC.
Per the deal, AES Corp. will sell its stakes in solar programs,
which are currently in service and in the development phase in the
U.S., Europe and India. The transaction is priced at $165 million
and is subject to customary regulatory approvals. Silver Ridge
Power is a partnership venture between Riverstone Holdings LLC and
The company anticipates receiving regulatory consent by the end of
this month. The recent stake sale is part of the company's efforts
to boost shareholders' returns through the proceeds gained.
AES Corp. solar stake sale comes as a surprise given the
Environmental Protection Agency's (EPA) policies that aim at
promoting renewable energy use in power generation. The recent EPA
proposal calls for a 30% reduction in carbon emissions from
coal-fired plants by 2030 from the 2005 level.
AES Corp.'s decision to sell interest from its solar project is
strategic as solar power holds a nominal share in the company's
overall generation mix and will unlikely hurt its renewable
generation portfolio. Presently, the company is focused on
expanding its wind and hydroelectric assets instead. The company
generates 29% of its total electricity from renewable sources with
wind and hydroelectricity ruling the renewable mix.
AES Corp., however, will hold onto its 50% interest in the solar
projects in Puerto Rico and Spain. The company also provided
SunEdison with the option of purchasing AES Corp's 50% stake in the
130 MW solar project in Italy for an extra $42 million by Aug 2015.
Meanwhile, AES Corp. will collect $50 million as proceeds from
) tax equity investment in the 266 MW Mount Signal project in
California that commenced operation in Apr 2014.
Going forward, bullish power demand in the markets of Chile,
Central America and Asia is the key factor behind the company's
increased utility-scale investments in these regions. AES Corp. has
been systematically exiting from non-competitive markets to
concentrate its resources on high-growth assets. It has a sizeable
construction backlog of 4,100 MW, comprising a 1,320 MW coal plant
in India and the 531 MW hydroelectric project in Chile.
Currently, the company carries a Zacks Rank #3 (Hold). Another
better-ranked utility player looking good in the market includes
Zacks Ranked #1 (Strong Buy)
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
ENTERGY CORP (ETR): Free Stock Analysis Report
AES CORP (AES): Free Stock Analysis Report
SUNEDISON INC (SUNE): Free Stock Analysis
To read this article on Zacks.com click here.