The district energy system that serves more than 100 commercial and industrial customers and 5,500 employees at Eastman Business Park has been acquired for $260 million.
Ironclad Energy Partners LLC, an affiliate of Stonepeak Infrastructure Partners, has agreed to sell 100 percent of its indirect equity interests in RED-Rochester LLC and affiliates to SDCL Energy Efficiency Income Trust (SEEIT) plc.
RED is one of the nation’s largest district energy systems and it has continuously served the 1,200-acre EBP and its customers with their utility needs for more than a century. RED serves customers with its efficient and environmentally friendly tri-generation plant, delivering 16 different utility services including steam, chilled water, electricity and more.
“As a New York-based asset manager, Stonepeak is pleased to have had the opportunity to support a successful transition of the RED assets and to meaningfully contribute to the ongoing revitalization of the Finger Lakes Region of New York,” said Stonepeak Senior Managing Director Luke Taylor in a statement. “We are confident that the new owners will continue our efforts to drive environmentally-conscious growth within the Eastman Business Park.”
Upon acquisition in 2016, Stonepeak and Ironclad committed roughly $80 million of additional capital to execute on the conversion of RED’s coal-fired central plant to modern natural gas boilers. The brownfield project was delivered in 18 months, on time and on budget and without disruption to customers, officials noted. Following the completion of the natural gas conversion, Stonepeak and Ironclad committed additional capital to further modernize RED’s facilities, completing more than 40 efficiency projects during the four-year ownership period, and identifying more than 100 additional projects for future execution.
Through executed and identified projects, RED is expected to reduce carbon dioxide emissions within EBP by the equivalent of an 880MW photovoltaic solar installation and will reduce sulfur dioxide and NOx emissions by roughly 99 percent and 60 percent, respectively. SDCL expects to continue the modernization and efficiency efforts under its ownership, which are expected to continue delivering both increased profitability and emissions savings via fuel usage reduction.
“SEEIT is acquiring an operational and established district energy system that provides a range of essential and efficient energy services and utilities to a diversified customer base on one of the largest business parks in the United States of America,” said Jonathan Maxwell, founding partner and CEO of SDCL. “We expect the project to make positive contributions to SEEIT’s earnings and cash flow. At the same time, the project offers the potential for growth over the medium to long term through the addition of new customers and the implementation of accretive energy efficiency measures.”
The transaction is expected to close in the second quarter of 2021, following receipt of customary regulatory approvals.
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