Singapore GIC's $2 bil. investment in Duke Energy sees first-phase completion

13, Sep. 2021

On July 29, 2021, Duke Energy reached a significant milestone – it now owns, operates, or purchases more than 10,000 MW of solar and wind energy throughout the United States.(Photo: Duke Energy)
On July 29, 2021, Duke Energy reached a significant milestone – it now owns, operates, or purchases more than 10,000 MW of solar and wind energy throughout the United States.(Photo: Duke Energy)

By Celine Chen

SINGAPORE, NNA - Duke Energy, a leading US renewable energy provider, has wrapped up the first of a two-phase sale transaction with Singapore's GIC Private Ltd, taking cash proceeds of $1.025 billion in exchange for an 11.05 percent stake in Duke Energy Indiana (DEI).

The sale to an affiliate of the sovereign wealth fund of Singapore government comes under an earlier agreement in which GIC will acquire a 19.9 percent indirect minority interest in Duke Energy Indiana for a total of $2.05 billion in two stages.

The initial investment will help fund the company's $59 billion capex plan and satisfy all equity capital raising needs through 2025, said Duke Energy in a press statement on September 8.

The Fortune 150 company added that it has the discretion to determine the timing of the second closing, which will occur no later than January 2023.

Lynn Good, Duke Energy's chair, president and CEO, said, "We are pleased to have GIC as a long-term investor in DEI, underscoring the value and growth potential of our Indiana operations. This transaction will allow us to accelerate our clean energy strategy across our regulated utilities and continue delivering sustainable value to our customers, communities and investors."

Stan Pinegar, DEI state president, said the partnership with GIC reflects the extraordinary value Duke Energy and its employees have created in "delivering safe, reliable, affordable and increasingly cleaner energy" to customers.

Ang Eng Seng, GIC's chief investment officer of infrastructure, said, "As a long-term investor, GIC strongly believes that companies focused on meaningful sustainability practices will create better risk-adjusted returns over the long term. We are committed to actively engaging with Duke Energy's management team to support their clean energy transition goals and build long-term sustainable value."

The first transaction was completed after receiving approval from the Federal Energy Regulatory Commission and the Committee on Foreign Investment in the United States.

Headquartered in Charlotte, North Carolina, Duke Energy is one of America's largest energy holding companies. Its electric utilities serve 7.9 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, and collectively own 51,000 megawatts of energy capacity.

Its natural gas unit serves 1.6 million customers in North Carolina, South Carolina, Tennessee, Ohio and Kentucky.

The company, which employs 27,500 people, is launching an aggressive clean energy strategy to create a smarter energy future for customers and communities.

It aims to reduce carbon emissions by at least 50 percent by 2030 and net-zero emissions by 2050.

The company said it is on track to own or purchase 16,000 megawatts of renewable energy capacity by 2025. The company is investing in major electric grid upgrades and expanded battery storage.

It is also exploring zero-emitting power generation technologies such as hydrogen and advanced nuclear.

The global renewable energy market is set to witness a spending growth of over $330 billion at a compound annual growth rate of more than 7 percent from 2019 to 2024, according to SpendEdge.

Subsidies by governments are facilitating large-scale procurements in the renewable market, enabling suppliers to provide energy at lower costs than non-renewable ones.

Currently, the Asia Pacific region holds the major share in the global market and is expected to retain its position through 2024, said the research firm.

Mandates issued by governments in countries such as India, China, Japan, Thailand, and Indonesia to curb emissions of greenhouse gases are driving up demand for renewable energy.

In 2018, 40-50 percent of global investments in renewable energy were made in the APAC region, noted SpendEdge.

In Singapore, about 95 percent of the electricity is generated using natural gas, the cleanest form of fossil fuel.

Natural gas will continue to be a dominant fuel in the near future as the country scales up transitions to solar, regional power grids and emerging low-carbon alternatives.