KKR Ready to Add PG&E's Power Plants to List of Acquisitions

Researched by Industrial Info Resources (Sugar Land, Texas)--Investment giant KKR & Company Incorporated (NYSE:KKR) (New York, New York) is on the cusp of acquiring a significant stake in PG&E Corporation's (NYSE:PCG) (Oakland, California) fleet of power plants, according to The Wall Street Journal. The deal, which is expected to total between $2 billion and $3 billion, would see the two companies form a partnership called Pacific Generation, 49.9% of which would be held by KKR. Industrial Info is tracking more than $6.5 billion worth of active and planned projects across the U.S. from KKR or PG&E.

Click on the image at right for a graph detailing KKR's active and planned projects across the U.S., by industry sector.

KKR would invest in Pacific Generation through its infrastructure arm, giving it a share in returns in the generation fleet, as well as revenues from the sale of electricity, according to the Journal. KKR already is at work on several projects across the U.S. involving assets it acquired from existing companies, such as LCY Chemical Corporation (Taipei, Taiwan) and CyrusOne LLC (Dallas, Texas).

LCY Chemical, which was acquired by KKR in 2019, is building a $200 million isopropyl alcohol-recycling plant in Phoenix, Arizona, which is designed to purify metal-contaminated isopropyl alcohol into reusable, electronics-grade material for the semiconductor market. The project was sparked by Taiwan Semiconductor Manufacturing Company Limited's (TSMC) (Hsin-chu, Taiwan) massive semiconductor chip-fabrication complex in Phoenix, also under construction.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Project and Plant databases can learn more about the LCY development from a detailed project report and plant profile. For more information on the TSMC project, subscribers can click here for a list of related reports and read Industrial Info's March 5, 2024, article - One of Arizona's $65 Billion of Industrial Manufacturing Projects Underway Moves Forward.

In 2022, KKR and Global Infrastructure Partners (GIP) (New York) acquired CyrusOne for about $15 billion, giving the two companies a firm position in the burgeoning data center market. CyrusOne is at work on a $50 million renovation of its data center in Allen, Texas, and is considering a third-phase expansion at the same facility to address rapidly growing customer demand in the region. Subscribers can read detailed reports on the renovation and proposed expansion, and see a related plant profile.

PG&E Seeks Lifeline Amid Troubles
Through its deal with PG&E, KKR would play a crucial role in the electricity provider's massive hydroelectric system, as well as its smaller fleet of natural gas, solar and battery energy-storage system (BESS) facilities, according to the Journal. PG&E has faced frequent obstacles in raising capital following a bankruptcy filing in 2019 spurred by wildfires that swept California, for which its equipment and operations were found to be partly responsible. PG&E emerged from the bankruptcy in 2020, but with heavy debt.

Nonetheless, PG&E is proposing $62 billion in investments through 2028. Among its projects under construction is a $46.3 million pilot microgrid in Calistoga, California, which would overhaul a substation to serve the Calistoga area with lithium-ion batteries and fuel cells that run on hydrogen. Subscribers can learn more from a detailed project report.

The deal with KKR could help PG&E address the looming surge in demand from data centers, which are growing rapidly across the U.S. and soak up heavy amounts of energy use. "I think there's a national challenge with the supply chain and being able to access some of the necessary equipment to build out that capacity as well as timely cash recoveries and cost recoveries for that investment," said Patricia Poppe, the chief executive officer of PG&E, in a recent earnings-related conference call.

Subscribers to Industrial Info's GMI Project and Plant databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Subscribers can click here for a full list of reports for active and planned projects across the U.S. from KKR, and click here for a full list of reports for active and planned projects from PG&E.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).