Partners Group buys California energy assets worth $2.2 billion

The companies announced on Tuesday that Swiss private equity firm Partners Group would purchase an energy asset-management platform in California and certain gas-fired electricity plants from U.S. based Avenue Capital Group, for $2.2 billion.

The U.S. energy consumption is

Expectations of record highs

In 2025 and 2026, the demand for electricity will increase due to data centers devoted to artificial intelligence (AI) and cryptocurrency. Meanwhile, homes and businesses will use more electricity to heat and transport.

However, the surge in demand is straining the country's resources.

Grid Infrastructure

Avenue's Middle River is developing on-site batteries energy storage systems at its existing gas fired power plants. These systems store energy and are charged with surplus renewable energy on the grid.

Partners Group stated in a press release that "natural gas-fired plant and BESS have become increasingly important for grid reliability."

Partners Group has agreed to buy Middle River Power, a portfolio of 11 natural-gas power plants totaling 1.9 GW from Avenue.

Middle River Power, formed in 2016, was created to manage and operate Avenue's power investments. It also offers asset management services to other owners of power plants outside California, totaling 4.8 GWs.

Partners Group, with its global assets of about $150 billion, said that the portfolio "benefits from thematic tailwinds including demand growth and increasing penetration intermittent renewables."

The price of natural gas has risen by about 9% this year. It reached a 26-month peak in early March, due to record flows into LNG plants. There were also concerns that the U.S. tariffs imposed on Canada and Mexico could affect gas exports to Canada.

The companies stated that Davis Polk & Wardwell advised Partners Group on the deal. Avenue, with over $11 billion of assets under management was advised Guggenheim Securities & Co. and Morgan Stanley & Co. (Reporting and editing by Devika Syamnath in Bengaluru)

(source: Reuters)