CALGARY — TransCanada Corp. is offloading its only solar power holdings in a $540-million deal as it moves against the industry trend of investing more in renewables.
The company said Wednesday it was selling the eight facilities in Ontario with 76 megawatts of capacity to a subsidiary of Axium Infrastructure Canada II L.P., with plans to spend the proceeds on its $24 billion in near-term capital projects.
The sale leaves TransCanada's renewable portfolio with 365 megawatts of wind power through its partial ownership of Cartier Wind, after the company sold its hydropower and wind generation assets in the U.S. earlier this year to help fund its US$13-billion takeover of Columbia Pipeline Group.
The moves come as Canada's other pipeline giant, Enbridge Inc. (TSX:ENB), has been adding to its renewable portfolio while also making big acquisitions on the pipeline front.
In February, Enbridge bought an effective 50 per cent ownership of the 497-megawatt Hohe See wind project in Germany with plans to invest $1.7 billion in its construction. Meanwhile last year, it bought a 50 per cent interest in French offshore wind company Eolien Maritime France SAS for $282 million and acquired the 249-megawatt Chapman Ranch wind project in Texas that will cost an estimated US$400 million to build.
Enbridge is also partnered in the development of the 400-megawatt Rampion wind project in England, which it says should be online next year, and owns operational solar and wind assets elsewhere in North America.
The diversification strategy at Enbridge is part of a bigger trend in the industry, with especially European oil and gas majors ramping up their investments in renewables.
TransCanada looks to be going against the grain by reducing its energy diversification, said Warren Mabee, director of Queen University's Institute for Energy and Environmental Policy.
"This is the first big example of an energy company in Canada pulling back from renewable energy investments, and maybe focusing in on their core business," said Mabee.
"At a time when more and more governments and more and more investment groups are looking to green their portfolio, I think that could hurt them."
Bloomberg New Energy Finance said this week that many big energy companies are investing in renewable energy as pressure mounts for them to diversify, estimating oil majors have completed 428 deals and spent an estimated US$6.2 billion over the past 15 years to buy into clean energy companies.
Royal Dutch Shell CEO Ben van Beurden said earlier this year that he expects the company to spend as much as US$1 billion a year by 2020 on its New Energies division.
TransCanada spokesman Terry Cunha said the company continues to pursue growth opportunities in the power market across North America, considering both environmental and financial advantages.
The company's 6,200-megawatt energy portfolio consists of nuclear, natural gas, co-generation and wind facilities, including the Bruce Power nuclear plant and a 900-megawatt natural gas-fired power plant under construction in Napanee, Ont.
In its corporate social responsibility report in September, Girling said that respected authorities forecast natural gas and oil will continue to be dominant energy sources for decades to come, and that outlook is reflected in the make-up of TransCanada's business and growth plans.
Greenpeace senior energy strategist Keith Stewart said in an email that the strategy shows the company is out of touch with current trends.
"It looks like TransCanada has given up on even pretending to take climate change seriously," said Stewart.
"The company is doubling down on a sunset industry because oil and gas is what it knows, but long-term investors should recognize that selling your solar farms to finance pipelines is the equivalent of cancelling your Netflix subscription so you can get a premium membership at Blockbuster."
RBC Capital Markets analyst Robert Kwan said in a note that the size of the solar asset sale was modest, but slightly positive for the company because selling non-core assets is an efficient way to finance growth costs.