SEMBCORP Industries : U96 0%’ wholly owned subsidiary, Sembcorp Power, has signed two long-term power purchase agreements (PPAs) with subsidiaries of Equinix, a US-based data-centre firm that operates as a real estate investment trust (Reit).
On Monday (Apr 29), Sembcorp said the PPAs will be accretive to the group’s earnings in the financial year ending Dec 31, 2024.
Under the agreements, Sembcorp Power will supply Equinix a maximum capacity of 75 megawatt-peak (MWp) from its renewable energy portfolio, and 30 megawatts (MW) from its power generation portfolio, for up to 18 years.
The power supply will be sourced from Sembcorp’s solar assets.
Sembcorp said this represented Equinix’s first renewable energy PPA in Singapore.
The deals are expected to increase Sembcorp’s long-term contracted capacity for its gas-fired power generation portfolio in Singapore to 77 per cent, from 74 per cent currently.
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These new Equinix PPAs will also help to ensure a “strong and stable stream of operating cash flow” for Sembcorp, added the group.
Shares of Sembcorp were trading S$0.11 or 2 per cent lower at S$5.33 as at the midday trading break.
Earlier on Mar 20, short seller Hindenburg Research disclosed a short position in Nasdaq-listed Equinix alleging exaggerated profitability metrics.
In its report, Hindenburg claimed that the Reit with more than 260 facilities globally was using an accounting trick to boost its adjusted funds from operations.
The Reit’s board of directors on Mar 25 announced that it launched an independent investigation to review the matters referenced in the report.
Equinix said that it also received a subpoena from the US Attorney’s Office for the Northern District of California “shortly after” the release of Hindenburg’s report.
“Receipt of these types of inquiries is not unusual in these circumstances, and Equinix intends to fully cooperate in this matter. The company does not expect to comment further on such matters until appropriate to do so,” said the company in its Mar 25 Nasdaq filing.
