Renewable energy company Xcel Energy has signed a $650m agreement to acquire Mankato Energy Center from US wholesale energy firm Southern Power.
Mankato is a natural gas-fired, combined-cycle generation facility with a 375MW unit, Mankato Energy Center I and a separate 345MW unit, Mankato Energy Center II, which is currently being added to the plant.
Southern Power entered a deal to purchase the Mankato Energy Center from Calpine for $395.5m in September 2016, and closed the transaction in October the same year.
The Mankato sale is intended to further boost Southern Power’s wholesale energy supply in the US, along with its aim to bolster carbon-free renewable energy portfolios.
Proceeds from the sale are intended to also strengthen the balance sheet of Southern Power parent organisation, Southern Company.
Subject to regulatory approval and other closing conditions, the transaction is expected to be complete by mid-2019.
Southern Power president and CEO Mark Lantrip said: “The Mankato Energy Center is a valuable part of the local community and the regional energy infrastructure.
“This transaction is a great opportunity to deliver value for the benefit of Southern Company shareholders.”
Barclays acted as the financial adviser and Baker Botts as primary legal counsel to Southern Power.
Mankato Energy Center II is scheduled to begin operations by June next year. After completion of the expansion project, the facility is expected to possess a maximum capacity of nearly 760MW.
Under a tolling agreement, Mankato supplies electricity to Xcel Energy’s subsidiary Northern States Power until July 2026. The second unit is set to serve a further 20-year agreement with Northern States Power.