Last week saw the announcement of a $200 million deal between MetLife Investment Management and Starwood Energy Group to finance the decommissioning of the last two coal-fired plants in New Jersey. The plants, owned by Starwood Energy, will cease operations in May 2022 under this new deal – 30 months ahead of schedule – resulting in an overall carbon emissions reduction of 3.9 million tonnes.
Outside of the carbon emissions that will be saved as a result of the investment, MetLife said in its press release that “an estimated $30 million cost savings [will be provided to] ACE [Atlantic City Energy] customers. The transaction also supports New Jersey’s Energy Master Plan, which aims to reduce 80 percent of carbon dioxide emissions levels and reach 100 percent clean energy generation by 2050”.
The structuring and financing of the loan was overseen by MetLife’s private capital team on behalf of multiple third-party institutional clients and MetLife’s general account.
Affiliate title Infrastructure Investor understands that the loan was attractive to said investors for a variety of reasons, including credit quality, the maturity of the deal and the counter-party involved, Atlantic City Electric, a transmission and distribution utility. Investors also looked favourably upon the deal’s ESG component and the fact that the deal’s payment obligations were already pre-approved by both utility regulators and Atlantic City Electric.
The $200 million in question will be used to pay off the remaining 30 months of the power purchase agreement between Atlantic City Electric and Starwood Energy. Prior to the decommissioning, MetLife had no involvement with the owning or operation of the two coal plants.
As to whether or not MetLife will continue to seek out other decommissioning deals, Infrastructure Investor understands that the firm is keeping it on the table. Given that the proportion of US electricity needs being met by coal is continuously shrinking, industry leaders see a potential need to decommission the nation’s coal plants as time progresses.
MetLife and Starwood Energy declined to comment beyond the press release.