Sempra Energy Sells Solar Assets for $1.54 Billion

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Energy infrastructure and distribution company Sempra Energy (NYSE: SRE) said Thursday morning that it has sold its U.S. non-utility operating solar assets, its solar and battery storage development projects and one wind facility to Consolidated Edison Inc. (NYSE: ED) for $1.54 billion.

Last June, Sempra announced that it planned to sell all its non-utility U.S. wind and some midstream natural gas assets as it optimizes its portfolio and narrows its strategic focus. The sale to ConEd includes about 980 megawatts of installed capacity and is expected to close by the end of this year.

When Sempra announced its plans in June, CEO Jeffrey W. Martin noted that the renewable assets were a “great platform,” but Sempra had determined that they would be “more valuable to another owner.”

Sempra got a push from Bluescape Resources and Paul Singer’s Elliott Management that together owned about 4.9% of Sempra’s stock. Both want the utility company to focus more on its regulated business, and Elliott was not entirely happy with what it saw as a half-hearted effort to divest poorly performing assets.

In addition to the assets it is selling to ConEd, Sempra owns eight other wind projects, but the company’s money makers are Southern California Gas, San Diego Gas & Electric and Oncor Energy. The two California-based firms serve around 25 million customers and claim a rate base of around $14 billion. Oncor Energy serves the Midland/Odessa area that is the hub of Permian Basin oil and gas production. Oncor has about 10 million customers and a rate base of more than $11 billion.

In its second-quarter 10-Q, Sempra took an impairment charge of $200 million related to its renewables business. The amount was far less than the June estimate of $870 million to $925 million. Sempra also reclassified its renewable assets as assets held for sale. The second-quarter total of assets held for sale came to $1.88 billion, up from $135 million at the end of the first quarter.

Sempra stock traded up 0.6% Friday morning at $115.02 in a 52-week range of $100.49 to $127.22.