Caithness exits renewable energy business
As referenced earlier today, ArcLight Capital and Caithness Energy LLC have entered into a deal where ArcLight will take an interest in 824MW of power generation in geothermal, solar thermal, and wind projects.
Upon reviewing the remaining Caithness Energy LLC portfolio the company is left with one undisclosed hydro power project and the remainder of its portfolio is now fossil fuel based with the largest component being natural gas (one diesel and one coal project exist as well.)
With the transfer of the geothermal, solar thermal, and wind assets and their operation to ArcLight, Caithness has effectively exited the renewable energy business after 25 years. Once operating agreements with eneXco and Seapower West lapse in the wind projects, it is likely ArcLight will take over operation of those projects as well.
With renewable energy’s move toward the mainstream, it’s interesting that Caithness would take this opportunity to exit. Perhaps it is because of the current hot market the management team looked for a high dollar value exit, on asset value alone, this is a billion dollar deal. Does the Caithness management team believe that the sector valuation has peaked?
The flip side of that is ArcLight’s asset acquisition positions them to enter the renewable power business in a big way. The Caithness assets join CPV Wind Ventures in the portfolio. ArcLight has vast experience in the power industry and has extensive interest in coal and gas fired power plants, along with transmission and pipeline operations.
