Alternative asset manager KKR has announced that it is buying EDF Group's U.S. and Canadian power solutions businesses for $4.2 billion, plus up to $390 million in further payments. The investment is the largest single investment KKR has made in renewable energy so far.

EDF power solutions North America is a part of that acquisition, and it is the company that owns, operates and develops renewable energy assets throughout North America. It is a sign of ongoing investments in the renewable energy sector, clean energy infrastructure, solar energy, battery storage solutions, and investments in energy transition.

Deal targets renewable resources and renewable operations platform

EDF power solutions North America has a diversified portfolio of renewable energy projects, including solar, wind and battery storage. The company ranks among the top-ten U.S. renewable energy capacity owners and offers services throughout project development, construction, operations and maintenance (O&M) and asset management.

The business caters to a variety of customers such as utilities, corporate buyers and institutional customers. It integrates a platform that allows them to handle their projects from their initial development stage up to their long-term use.

The purchase will expand KKR's renewable energy footprint and bolster the existing asset footprint and development pipeline of EDF, the company said. The investment will come from KKR's global Infrastructure strategy.

The investment is coming at a time when the demand for electricity has been increasing.

KKR said that the deal is motivated by several factors, such as the rise in electricity demand from the United States driven by the growth of data centres, manufacturing and increased electrification.

The company said as the demand for a steady power supply rises, energy infrastructure investments are gaining traction. Supporting future electricity demand by reducing emissions from power generation is increasingly relying on renewable generation, battery storage, and related technologies.

Acquisition represents another milestone in KKR's energy transition and sustainable infrastructure investment efforts. The firm has invested in infrastructure projects that are related to energy, transportation and digital systems in the past.

Electricity demand forecast to keep growing at EDF.EDF's business is projected to remain expanding.

After the acquisition, KKR will provide its resources and strategic support to EDF power solutions North America to help improve operational efficiency, diversify its renewable asset exposure and drive project development activities.

The renewable energy business currently has a diverse portfolio of utility-scale renewable projects and energy storage solutions to enhance grid security and clean electricity generation. The company has built projects in various parts of North America, adding to the growth of renewables.

It also reflects the general market activity in the renewable infrastructure field, with investment companies and energy companies gaining more interest in the sector. Increasing demand for new electricity-generating capacity is driven by rising electricity use by industries like technology, manufacturing and transportation.

KKR underscores need for more power capacity

The investment is part of a need for cost-effective power as electricity demand is to be expected to increase in the United States," said Cecilio Velasco, Managing Director at KKR.

KKR's investment in EDF power solutions North America helps address the critical need for affordable power as U.S. demand for electricity grows, with data centres, manufacturing “reshoring" and overall U.S. electrification driving the need, Velasco said.

The transaction will help bolster EDF power solutions' North American position for continued growth in the emerging renewable energy market. There are customary closing conditions and regulatory approvals to the transaction.

The agreement comes as companies have increasingly been entering into large scale renewable energy transactions to address growing demand for clean energy in the form of sustainable electricity solutions.