FuelCell Energy has entered into an agreement to acquire the existing 14.9 megawatt fuel cell park in Bridgeport, Connecticut, US from Dominion Energy.

The US company developed, constructed and commissioned the Bridgeport fuel cell park in December 2013. It has operated and maintained the plant under a service agreement with Dominion Energy since it was commissioned.

FuelCell Energy intends to own and operate the plant as part of its generation portfolio. The transaction is expected to:

  • Add annual revenue in excess of $15 million per year
  • Deliver EBITDA margins in excess of 50%
  • Be accretive to FuelCell Energy’s earnings per share

Under the terms of the agreement, FuelCell Energy will acquire 100% of the equity interest in Dominion Bridgeport Fuel Cell, LLC, the owner of the 14.9 MW project asset, whose parent is currently Dominion Energy. This agreement is the result of a competitive bid process undertaken by Dominion Energy.

“The purchase of the Bridgeport fuel cell park project from Dominion Energy is strategically important for FuelCell Energy,” said Chip Bottone, President and CEO of FuelCell Energy. “We undertook the construction of this project in 2012 with the support of Dominion Energy, leading to substantial benefits for numerous stakeholders.”

“Having been the operator of the Bridgeport fuel cell park for the past five years, we are uniquely positioned to acquire and benefit from this established project.”

“This important acquisition will materially accelerate our strategy to retain generation assets and to benefit from their financial profile of consistent revenues, operating profits and cash generation.”

“Lastly, I would like to acknowledge the continued support of the Connecticut Green Bank who supported us five years ago in the construction of this project and is playing a key role in financing this acquisition.”

Total cash consideration to be paid is $36.6m. FuelCell Energy expects to fund the acquisition with a combination of third party financing and $15m of restricted cash on hand that is tied to the project and would be released at closing.

Financing for this acquisition is expected to include a term lender and the Connecticut Green Bank, who also participated in the initial financing of the construction of the project.

The closing of this transaction is expected to happen on or before 31st December (2018) subject to customary closing conditions and contingencies including closing third party financing.

This acquisition will bring Fuel Cell Energy’s generation portfolio to 26.1 MW, which coupled with 83 MW of new project awards and backlog, provides a line of sight to achieving the company’s long-term generation portfolio milestone of 60 MW.