GENERAL

Wind Energy Transmission Texas

415-mile regulated, high-voltage transmission system in West Texas connected to 2,873 MW of wind and solar farms

Please note this investment was executed during prior employment of a Reinova Co-Founder

Amount Invested

$191m

Date of Investment

2009

Transaction Overview

Brookfield partnered with an EPC company to bid on, win, and ultimately build and operate $750 M of regulated transmission lines in West Texas

Transaction Overview

Brookfield partnered with an EPC company to bid on, win, and ultimately build and operate $750 M of regulated transmission lines in West Texas

Investment Thesis

Opportunity to invest in a regulated, transmission development project with very attractive risk-adjusted return
Upon completion, cost basis in system would be 1.0X rate base when operational transmission assets traded for in excess of 1.5X ratebase
Minimal development risk compared to traditional development project

Invest for Value

Limited Development risk

In 2005 Texas passed legislation leading to the establishment of Competitive Renewable Energy Zones, which significantly streamlined permitting, siting and right-of-way risk

Joint Venture Formation

Formed a JV with Isolux to offer a fully integrated proposal to design, build, own, and operate one of the CREZ systems in West Texas
Isolux was one of most experienced transmission builders In South America

Project Win

In competition with Texas utilities and developers, the JV won the rights to build a415-mile, 345 KV transmission system with a construction cost of$750 M, all of which was eligible for rate base
Development risk mitigated as all development cost was eligible for rate base following receipt of utility license

Value Creation

Project Capitalization

At commencement of construction in 2009 WETT was capitalized with operating and holding company debt totaling65% of total capital cost, supported by~$275mnof equity

Successful Rate Case

In 2013 WETT achieved commercial operations of the initial375 miles of its system
In 2015 the PUC of Texas issued an order providing for full inclusion of WETT’s construction and development cost in rate base, resulting in a cost basis for the JV of1.0x rate base
The PUC approved a 60%/40% capital structure and a regulated ROE of 9.7%

Building for Exit

Exit and Returns

In 2020: WETT was sold to an infrastructure fund for an attractive multiple of rate base

Wind Energy Transmission Texas

Amount Invested

Amount Invested

$191m

$191m

Date of Investment

Date of Investment

2009

2009

Transaction Overview

Transaction Overview

Transaction Overview

Investment Thesis

Investment Thesis

Invest for Value

Invest for Value

Limited Development risk

Joint Venture Formation

Project Win

Value Creation

Value Creation

Project Capitalization

Successful Rate Case

Building for Exit

Building for Exit

Exit and Returns

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