Canadian public sector pension fund PSP buys portfolio of U.S. hydro assets for $1.2B

MONTREAL—The Public Sector Pension Investment Board is building up its hydroelectric power portfolio.

The fund, which operates as a crown corporation, has agreed to buy a 1.4 gigawatt portfolio of New England hydroelectric assets from the ENGIE Group for $1.2 billion.

“PSP Investments is extremely pleased with the acquisition of these significant hydroelectric facilities which form an important component of the Eastern U.S. energy market,” Guthrie Stewart, senior vice-president and Global Head of Private Investments at PSP, said. “The purchased assets are an excellent fit with PSP Investments’ long-term investment horizon and its strategy to leverage industry-specialized platforms, such as H2O Power.”

Located mainly along the Connecticut and Housatonic Rivers in Massachusetts, the hydro facilities make up the second-largest privately-owned hydroelectric portfolio in New England. Along with 12 conventional hydro plants, the portfolio also includes the 1,168MW Northfield Mountain pumped-storage facility.

PSP said it plans to use its expertise in hydroelectric plants to maximize the assets’ potential benefits. The fund currently owns a majority stake in H2O Power LP, which operates 10 hydro stations in Canada the U.S. The 1.4 GW deal will build up the crown corporation’s hydro power footprint significantly, however; H2O Power’s generating capacity was only 170 megawatts previously.

The tentative deal is subject to customary closing conditions.