$4B for Rural US Energy, Brookfield Neoen Acquisition

The USDA has announced $4.37 B in funding for the Empowering Rural America program, Brookfield Asset Management has acquired a 53% stake in Neoen, and European Energy and Nova Holdings will upgrade 17 aging German wind farms.

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Welcome to Uptime News Flash. Industry news lightning fast. Your hosts, Allen Hall, Joel Saxum, and Phil Totaro discuss the latest deals, mergers, and alliances that will shape the future of wind power. News Flash is brought to you by IntelStor. For market intelligence that generates revenue, visit www.intelstor.com.

Allen Hall: Right, first up, the U. S. Department of Agriculture has announced a 4. 37 billion dollars in funding through their Empowering Rural America program. This historic investment, the largest in rural electrification since 1936, will support clean energy development across seven states. Now the program aims 5, 000 jobs, reduce electricity costs, and cut climate pollution by about 1.

1 million tons annually. 4. 37 billion as the Biden administration exits the executive branch is a lot of money. Does this have a chance of, of existing once the new administration comes in?

Phil Totaro: Yeah, I actually think so because this, this program is done through the Department of Agriculture interestingly enough, not the Department of Energy, and the reason that they’re doing it is because the co ops are actually, outside of kind of the, the organized utilities coordinating like corporate power buying. The co ops are actually one of the biggest You know, in aggregate power buyers in, in the United States, especially when you start talking about all the co ops, we’re getting kind of gobbled up by Touchstone and, you know, most co ops in the United States are now organized under, you know, a parent kind of umbrella corporation.

So this is a lot of money that’s going into, you know, basically subsidizing renewable energy power buying or the development of distributed power generation facilities. That are gonna be adjacent to these these rural communities that are able to take advantage of this this bunny. So, this is one where I really do hope that they don’t try and cut it because this is actually, like, Putting money in the pockets of people that are doing clean energy power buying, and it’s actually helping get wind and solar and storage deployed on the grid.

So I, this is actually a great program. Great for the department of agriculture to be doing it. Not sure why the department of energy wasn’t previously on board with something like this.

Joel Saxum: Coming from someone who has co op power now and grew up with co op power up in Northern Wisconsin in a rural area, injection of capital into rural environments anywhere makes me smile.

So, because they usually don’t see as much, right? So when a big project comes through or something gets announced like this, everybody gets a little bit happy in those areas. And so, weird to see it. Not weird, I suppose, in a lame duck situation from the federal government, but yeah, I hope this one continues to, to roll forward in these projects to get some ink behind them before January 20th.

Allen Hall: In our next story, Brookfield Asset Management has completed its acquisition of 53 percent stake in French renewable power producer Neoen SA. The deal valuing Neoen at 6. 1 billion euros will be followed by a tender offer for the remaining shares at about 39 euros each. And as part of the regulatory requirement, and there’s always regulatory requirements, Neoen has divested of its Australian portfolio, including a 652 megawatts of operational assets and 2.

8 gigawatts of project pipeline Phil obviously Brookfield. Asset management is a big player in energy in general and renewable energy. Neoen move in kind of getting out of this market, being acquired. What is the outcome of this? Where is this all going?

Phil Totaro: Well, it’s interesting because besides the, the divestment of their, you know, assets in Victoria, Australia, they also own obviously a substantial portfolio in France being a French company.

And Substantial Portfolio in Brazil. Ultimately, even with the divestment of their Australian portfolio, it gives Brookfield access to more markets where they didn’t necessarily have a presence before. Like France and Brazil where Brookfield was kind of, you know, You know, poking around and dipping their toe in the water a little bit, but they never actually had a substantial portfolio down there.

And France is a market within Europe where Brookfield also wasn’t particularly strong. It’s similar to Germany. It’s kind of a highly fragmented market in terms of a ton of small projects. And so, you know, the, the fact that somebody like Brookfield can come in take a chunk of portfolio and then get access to the market, learn how it’s all going, and hopefully anticipate what is expected to be a repowering market in France in a few years here.

You know, if Brookfield wants to have that kind of presence in Western Europe, this is a, this is a great move for them to to kind of kickstart that.

Joel Saxum: Yeah, Brookfield, we’ve seen them make some big investments in some companies you know, the Deriva one here in the States, which was Duke Energy they’ve done some other ones around the world, but the Neoen buy in, Neoen size, just so you understand, 500 plus million dollars or million euros in revenue last year.

8. 7 gigawatts in operation or under construction of renewable energies. They’re in 15 countries and they’ve got big targets of over 10 gigawatts for 10, for, to be in the pipeline or operating in 2025. So Brookfield buying into a big player here looking to maximize their footprint around the world.

Allen Hall: And finally, European Energy and Nova Holdings have joined forces to upgrade 17 aging German wind farms. The project will replace outdated turbines installed between 2002 and 2008 with modern, efficient equipment, tripling the current 151. 9 megawatt capacity. Once operational between 2027 and 2030, the modernized facility will generate 1, 100 gigawatt hours annually, powering 290, 000 European households.

Now, Phil. This is totally different in Germany, the repowering situation versus the United States, where in the United States of a repower, they’re putting out the same amount of power onto the grid. In Germany, they’re tripling it. How are they doing that?

Phil Totaro: It’s basically taking down turbines that are, you know, kilowatt size or maybe, you know, up to one, one and a half megawatts and just repowering it with something that’s, you know.

Six, seven, maybe close to eight megawatts. They’re, they’re building a rather substantial amount of new transmission in Germany to be able to do this. Keep in mind that the majority of electricity consumption, particularly industrial and corporate power offtake, is down in the southern part of Germany, which is more the industrial region and that zone.

So this partnership between European Energy and Nova Holdings is great for Germany, and it builds on what they’ve already done and demonstrated in Denmark and Sweden

Joel Saxum: European Energy got an investment last year, and they’ve been working, if you look through any of the internal news on their investment pages and portfolios, they’ve been raising cash, they’ve been making some, some funding moves.

Over the last few years and they have come from a smaller, relatively relatively small player to a much larger player, making a large impact all across the European renewable energy space. So kudos to European energy for getting in on this one as well.