Exelon takes Advantage of 2010 Wind Energy Downturn to Acquire Deere Wind Assets on the Cheap

2010 has been a Bad Year for Wind Energy as well as Green Stocks

Wind Energy in the USA has hit an Air Pocket in 2010 with Low Prices for Gas and lack of a Federal Push for Green Energy.The end of 30% Cash Grants for Wind Investments by 2010 end may lead to a worse 2011,if the incentives are not extended by the Congress.Note Wind Energy is the cheapest form of Green Energy with prices of 8-10c/KwH and the second most prevalent form of Renewable Energy after Hydro Power.China has become the largest installer of Wind Energy in 2009 with 13 GW showing a 100% CAGR over the last 2-3 years.Like in other sectors of Green Industry,USA is also losing the ball in Wind Energy as well due to lack of a comprehensive Federal Strategy like a Renewable Portfolio Standard (RPS).

Exelon uses Green Downturn to Acquire Wind Assets Cheaply

Exelon which is one of the biggest power utilities in the US with more than 30 GW of Power Capacity has managed to enter the Wind Sector at a very opportune time.The purchase price of just $1.2 million/MW  looks extremely cheap compared to the more than $2 million/MW paid in 2007 deals.Acquiring  735 MW at a price of $860 million is a bargain with $40 million being paid for 230 MW in advanced development.This Deal is not only very Cheap but will also help Exelon expand its Renewable Energy Portfolio to meet any RPS standard that is implemented in the future.The Deere Wind Energy Division used mostly Suzlon Turbines and its Wind Farms were spread out in 8 states of the US.To provide the icing on the cake,Exelon also gets to pursue around 1500 MW of Wind Energy Development that are in various stages of the Pipeline.Note 2006-2007 was the hottest period  for Wind Assets Acquisition with BP acquiring Origin EnergyLLC  and EDP acquiring Horizon  Wind .Most of the M&A at that time had priced operating Wind Assets at $1.5-2 million/MW compared to just $1.2 million/MW for this deal.

Exelon to buy Deere’s wind power unit for $860 million – Reuters

Electric utility Exelon Corp said it will buy Deere & Co’s wind power business for about $860 million, expanding its portfolio of carbon-free electricity generation.Exelon, the largest U.S. nuclear power operator, said the acquisition of John Deere Renewables will add 735 operating megawatts (MW) of clean energy to its portfolio, which currently includes about 1,000 MW of renewable power.

The deal includes a provision for an additional payment of $40 million for construction on 230 MW of wind power capacity in advanced stages of development.The Deere wind farms — 36 projects in eight states — have an operating capacity large enough to power 160,000 to 220,000 households.Deere, the world’s largest maker of tractors and havesters, said in February it was considering selling the businesses, which was an outgrowth of its credit business that helps farmers and other customers finance purchases of its equipment.