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Enmax selling downtown District Energy Centre for $27M — nearly $5M less than it cost to build

Calgary Herald logo Calgary Herald 2020-11-06 Amanda Stephenson, Calgary Herald
a large city: The ENMAX District Energy Centre is shown in downtown Calgary on Friday, November 6, 2020. © Provided by Calgary Herald The ENMAX District Energy Centre is shown in downtown Calgary on Friday, November 6, 2020.
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Enmax Corp. has reached a deal to sell its downtown District Energy Centre to a U.K.-based clean energy company

The $27-million deal with Atlantica Sustainable Infrastructure PLC — a publicly traded sustainable infrastructure company that owns and manages renewable energy, efficient natural gas, transmission and transportation infrastructures around the world — was announced by the city-owned utility Friday.

Located on the southwest corner of 4th Street and 9th Avenue S.E., Enmax’s District Energy Centre was built in 2010 at a cost of $31.8 million, with contributions from federal, provincial and municipal governments. It provides heating and hot water services to approximately six million square feet of commercial and residential buildings in Calgary’s downtown core and East Village, generating 55 megawatts (MW) of thermal energy and connecting to customers through a network of insulated underground pipes.

The facility was conceived as an opportunity to create a greener energy footprint in downtown Calgary, said Davin Kivisto, Enmax’s interim CFO, in an interview.

Kivisto said by selling off the asset, Enmax is choosing to place its focus on its core business, essential electricity services.

“It (District Energy) is a very small percentage of our asset base, it’s under half a percentage of our assets. It’s not core to what Enmax does,” he said. “We’re very proud of the design and build of the way it is now, but to take it to the next level, you really need someone who’s really active in the space and that’s not our core strategy.”

The deal, expected to close in the first quarter of 2021, was reached via a competitive bid process, Kivisto said. All of District Energy’s employees as well as its existing customer commitments will transfer to Atlantica’s ownership.

Enmax’s desire to focus on its “core business” stems from a shift in strategic direction the utility made in 2017 as a result of significant changes in the electricity industry, both within and outside Alberta. In the company’s 2017 financial report, Enmax referred to “difficult and uncertain circumstances” brought about as a result of an oversupplied market, weak economic conditions, negative electricity demand growth, and control of Alberta’s coal power purchase arrangements (PPAs) by the balancing pool.

In March of this year, Enmax purchased U.S.-based utility Emera Maine for $1.3 billion. That deal was intended to help Enmax grow its regulated rate base and diversify its revenue streams in North America.

Enmax’s total debt stood at $3.6 billion at the end of June. Following the purchase of the Maine utility, Enmax’s credit rating was downgraded by DBRS Morningstar to BBB (high) from A (low) in March.

Last month, it was revealed Enmax is expected to reduce jobs during a review of operations, as some business areas have been “hit hard” by the pandemic and its economic fallout. A company spokesperson said Enmax does not yet know the size of any potential staffing reductions, though some job impacts may occur prior to December, while others may occur in early 2021.


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