Duke Energy completes sale of commercial distributed generation portfolio, including REC Solar, to ArcLight

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Duke Energy completes sale of commercial distributed generation portfolio to ArcLight Capital Partners

Positive

• Duke Energy completes sale of distributed generation business to ArcLight Capital Partners, expanding focus on renewable platforms
• Proceeds from the sale will strengthen Duke Energy's balance sheet and support growth of regulated businesses

Negative

• None.

CHARLOTTE, N.C., Oct. 4, 2023 /PRNewswire/ -- Duke Energy (NYSE: DUK) today announced it has completed the sale of its commercial distributed generation portfolio to an investment fund managed by ArcLight Capital Partners, LLC (collectively, "ArcLight"), a leading middle market infrastructure investment firm.

The sale agreement, which was previously announced on July 5, 2023, includes REC Solar's operating assets, development pipeline and O&M portfolio, as well as distributed fuel cell projects managed by Bloom Energy.

ArcLight's acquisition of the distributed generation business further expands the firm's focus on developing strong standalone renewable platforms across the infrastructure sector. Employees of the distributed generation business will transition to ArcLight to maintain business continuity for its operations and customers.

BofA Securities, Inc. is serving as the financial advisor and Mayer Brown LLP is serving as the legal counsel to Duke Energy for this transaction. Scotia is serving as the financial advisor and Kirkland & Ellis is serving as the legal counsel to ArcLight.

Duke Energy is also finalizing the sale for its utility-scale renewables business platform, which it expects to close on by the end of 2023. Proceeds from both transactions will be used to strengthen Duke Energy's balance sheet and avoid additional holding company debt issuances. These transactions will support Duke Energy's focus on the growth of its regulated businesses, including investments to enhance grid reliability and help incorporate over 30,000 megawatts of regulated renewable energy onto its system by 2035.

Duke Energy

Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in Charlotte, N.C., is one of America's largest energy holding companies. Its electric utilities serve 8.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, and collectively own 50,000 megawatts of energy capacity. Its natural gas unit serves 1.6 million customers in North Carolina, South Carolina, Tennessee, Ohio and Kentucky. The company employs 27,600 people.

Duke Energy is executing an aggressive clean energy transition to achieve its goals of net-zero methane emissions from its natural gas business by 2030 and net-zero carbon emissions from electricity generation by 2050. The company has interim carbon emission targets of at least 50% reduction from electric generation by 2030, 50% for Scope 2 and certain Scope 3 upstream and downstream emissions by 2035, and 80% from electric generation by 2040. In addition, the company is investing in major electric grid enhancements and energy storage and exploring zero-emission power generation technologies such as hydrogen and advanced nuclear. 

Duke Energy was named to Fortune's 2023 "World's Most Admired Companies" list and Forbes' "World's Best Employers" list. More information is available at duke-energy.com. The Duke Energy News Center contains news releases, fact sheets, photos and videos. Duke Energy's illumination features stories about people, innovations, community topics and environmental issues. Follow Duke Energy on Twitter, LinkedIn, Instagram and Facebook.

ArcLight

ArcLight Capital Partners, LLC is an experienced, middle-market, value add infrastructure investment firm. Founded in 2001, ArcLight helped establish infrastructure as an asset class by pioneering an asset-based private equity approach to investing in infrastructure and has since built an experienced and successful investment platform. Based in Boston, ArcLight's investment team employs a value-added, operationally intensive investment approach that benefits from its dedicated in-house technical, operational, and commercial specialists and partners, as well as the firm's approximately 1,900-person asset management operational partner. More information about ArcLight can be found at www.arclight.com.

Forward-Looking Information

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases that include "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook" or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:

• The ability to implement our business strategy, including our carbon emission reduction goals;
• State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
• The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
• The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations, asset retirement and construction costs related to carbon emissions reductions, and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
• The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
• The impact of extraordinary external events, such as the pandemic health event resulting from COVID-19, and their collateral consequences, including the disruption of global supply chains or the economic activity in our service territories;
• Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
• Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy, reduced customer usage due to cost pressures from inflation or fuel costs, and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts, natural gas building and appliance electrification, and use of alternative energy sources, such as self-generation and distributed generation technologies;
• Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures, natural gas electrification, and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in a reduced number of customers, excess generation resources as well as stranded costs;
• Advancements in technology;
• Additional competition in electric and natural gas markets and continued industry consolidation;
• The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
• Changing investor, customer and other stakeholder expectations and demands including heightened emphasis on environmental, social and governance concerns and costs related thereto;
• The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the United States electric grid or generating resources;
• Operational interruptions to our natural gas distribution and transmission activities;
• The availability of adequate interstate pipeline transportation capacity and natural gas supply;
• The impact on facilities and business from a terrorist or other attack, war, vandalism, cybersecurity threats, data security breaches, operational events, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
• The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
• The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
• The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions, an individual utility's generation mix, and general market and economic conditions;
• Credit ratings of the Duke Energy Registrants may be different from what is expected;
• Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
• Construction and development risks associated with the completion of the Duke Energy Registrants' capital investment projects, including risks related to financing, timing and receipt of necessary regulatory approvals, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
• Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
• The ability to control operation and maintenance costs;
• The level of creditworthiness of counterparties to transactions;
• The ability to obtain adequate insurance at acceptable costs;
• Employee workforce factors, including the potential inability to attract and retain key personnel;
• The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
• The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities, as well as the successful sale of the Commercial Renewables Disposal Groups;
• The effect of accounting and reporting pronouncements issued periodically by accounting standard-setting bodies and the SEC;
• The impact of United States tax legislation to our financial condition, results of operations or cash flows and our credit ratings;
• The impacts from potential impairments of goodwill or equity method investment carrying values;
• Asset or business acquisitions and dispositions may not yield the anticipated benefits; and
• The actions of activist shareholders could disrupt our operations, impact our ability to execute on our business strategy, or cause fluctuations in the trading price of our common stock.

Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media contact for Duke Energy: Jennifer Garber
24-Hour: 800.559.3853

Media contact for ArcLight: Joshua Greenwald
646.504.7306

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SOURCE Duke Energy

FAQ

What is the impact of the sale on Duke Energy's stock price?

The sale of the distributed generation business could positively impact Duke Energy's stock price as it strengthens the company's balance sheet and supports the growth of its regulated businesses.

What is the financial advisor for the transaction?

BofA Securities, Inc. is serving as the financial advisor for Duke Energy in this transaction.

When does Duke Energy expect to close the sale of its utility-scale renewables business platform?

Duke Energy expects to close the sale of its utility-scale renewables business platform by the end of 2023.

What is the focus of Duke Energy's clean energy transition?

Duke Energy is focused on achieving net-zero methane emissions from its natural gas business by 2030 and net-zero carbon emissions from electricity generation by 2050.