United Utilities Group PLC (LSE:UU.) said it plans to sell its renewable energy business, United Utilities Renewable Energy Limited to SDCL Energy Efficiency Income Trust PLC (LSE:SEIT) for around £100mln.
Since 2014, United Utilities has developed a portfolio of solar, wind, and hydro renewable assets, and UURE currently consists of 70 renewable generation sites that provide renewable energy generated on-site directly to the group.
The company, which provides water and wastewater services in the North West of England, said its regulated water and wastewater business, United Utilities Water Limited, will continue to benefit from these assets following divestment.
By selling the UURE business, United Utilities said it can recycle the business capital back into the next phase of its net-zero journey, even as it continues to source green energy from the UURE portfolio.
SDCL said the portfolio is 90% solar PV operational projects and totals 69 megawatts (MW) across the north-west of England.
It said the assets are all connected to United Utilities Water (UUW) on-site water utility infrastructure via private wire, and provide green electricity under long-term, fixed-price power purchase agreements with UUW, which covers approximately 74% of total revenues.
Additionally, a number of assets benefit from 20-year Feed-in-Tariffs, with fixed RPI-linked payments backed by the UK government, which account for approximately 17% of the total revenues with a remaining weighted average life of 14.5 years.
Jonathan Maxwell, CEO of Sustainable Development Capital, which manages the SDCL trust, said: "This project is an opportunity with distinct energy efficiency characteristics, providing essential clean energy services directly to an essential end-user, thereby helping to reduce the carbon emissions associated with supply from the grid.
"SEEIT is acquiring an operational on-site portfolio of scale with an investment grade counterparty, which will increase its exposure to the UK, enhancing its overall diversification by geography, technology, and counterparty."