Exelon Corporation announced its acquisition of Antelope Valley Solar Ranch One, a 230-megawatt (MW) solar photovoltaic (PV) project under development in northern Los Angeles County, Calif., from First Solar, which developed and will build, operate, and maintain the project. Construction has started, with the first portion of the site expected to come online in late 2012 and full operation planned for late 2013.
When fully operational, AV Solar Ranch One will be one of the largest PV solar projects in the world, with approximately 3.8 million solar panels generating enough clean, renewable electricity to power the equivalent of 75,000 average homes per year. The project has a 25-year power purchase agreement (PPA), approved by the California Public Utilities Commission, with Pacific Gas & Electric for the full output of the plant.
"This project reinforces Exelon's industry-leading clean energy position, creates shareholder value and gives Exelon real scale in solar power," said John W. Rowe, Exelon chairman and CEO. "As the nation continues its transition to a clean energy future, our experience with AV Solar Ranch One will give us a clear competitive advantage."
Exelon expects the total investment of up to $1.36 billion to be accretive to earnings beginning in 2013 and free cash flow accretive starting in 2013. The project is value accretive, and will have stable earnings and cash flow profiles due to the PPA. Exelon expects to invest up to $713 million in equity in the project through 2013.
"We are pleased to be working with Exelon to realize the AV Solar Ranch One project, providing clean, affordable energy and hundreds of construction jobs to California," said Frank De Rosa, First Solar senior vice president, business development-Americas.
The U.S. Department of Energy's Loan Programs Office finalized a loan guarantee of up to $646 million to support project financing for AV Solar Ranch One. Advances under the loan are contingent on the satisfaction of various conditions. No regulatory approvals are needed for Exelon's acquisition of AV Solar Ranch One from First Solar.
In connection with the sale of AV Solar Ranch One, First Solar is filing a Current Report on Form 8-K with the Securities and Exchange Commission. First Solar investors should refer to such Form 8-K, as it contains important additional information, including information related to revenue recognition for the project.
The project will deliver economic benefits to the local community and the state of California, including the generation of state and local tax revenues and creation of up to a peak of 400 construction jobs and up to 15 ongoing operations and maintenance positions, with an emphasis on hiring workers from the local area.
This project demonstrates how Exelon 2020, the company's business and environmental strategy, delivers value through clean, low-carbon energy investments. When fully operational, AV Solar Ranch One will displace approximately 140,000 metric tons of carbon emissions per year - the equivalent of taking approximately 30,000 cars off the road. Plus, it will generate electricity with no water use, no air emissions and no waste production. Exelon's existing solar assets include Exelon City Solar, the nation's largest urban solar power plant, which is located on the South Side of Chicago and was completed in 2010.
The project will be built on 2,100 acres of fallow farmland near Lancaster, Calif., in the Antelope Valley area of the Western Mojave Desert, approximately 80 miles north of Los Angeles. The transaction expands Exelon's geographic presence into California, an attractive solar market with an ambitious renewable energy policy and some of the best PV resources in the world.
AV Solar Ranch One will employ First Solar's FS Series 3 PV Module and deploy its tracking system on a portion of the facility. The technology will increase electricity output by tilting the solar panels to track the daily path of the sun. The project also will feature innovative inverters with voltage regulation and monitoring technologies, which provide more stable and continuous power, increasing the project's efficiency and reliability.
The transaction follows Exelon's April 28 announcement that it plans to merge with Constellation Energy, which will combine two of the industry's leading clean energy generation fleets. With the addition of AV Solar Ranch One, their combined solar portfolio will include approximately 350 MW in operation and under construction. Constellation is a competitive electricity supplier and solar project developer in California and owns five solar projects in the state totaling more than 32 MW.
The acquisition of AV Solar Ranch One adds to the nearly $5 billion Exelon has said it plans to invest in cost-effective clean energy projects between 2010 and 2015. These projects also include uprates to Exelon's nuclear fleet and the acquisition of John Deere Renewables (now Exelon Wind) in 2010, which added 735 MWs to the company's portfolio of clean, renewable energy.
Bank of America Merrill Lynch acted as financial advisor and Sidley Austin served as legal advisors to Exelon, McDermott Will & Emery advised Exelon for certain tax matters, and Skadden, Arps, Slate, Meagher & Flom served as legal advisors to First Solar. SAIC Energy, Environment & Infrastructure, LLC, formerly R. W. Beck, Inc., provided independent technical advisory services.