Two power generators on opposite sides of the U.S.-Canada border said Oct. 26 that they are teaming up to build new natural gas power plants in Canada.
The strategic partnership between TransAlta (TSX: TA) and MidAmerican Energy Holdings builds on an existing successful relationship, the companies said in a joint statement. An alliance and partnership already exists between TransAlta and MidAmerican through CE Generation, LLC, and a limited company in which membership interests are equally owned by MidAmerican and TransAlta Investments USA.
“Studies are showing that more than [C] $200 billion worth of new investment in power generation is needed in Canada over the next 20 years,” said TransAlta President and CEO Dawn Farrell. MidAmerican is a strong partner to enable us to capture a sizeable share of that market opportunity, and this project will build off our already existing business relationship, which dates back to 2001,” Farrell said.
“We didn’t know each other,” back in 2001, Farrell said during her company’s quarterly earnings call. Both TransAlta and MidAmerican have grown comfortable working together since then. The new partnership will be “a much more structured business arrangement,” Farrell said.
The companies have worked together on geothermal power development in California’s Imperial Valley and some other U.S. projects, Farrell said. The joint effort should enable TransAlta to become much more aggressive in developing new generation, Farrell said.
The TransAlta chief said she is particularly bullish about the market opportunity in Western Canada.
“At MidAmerican, we have been seeking an entry point to the Canadian electricity generation market, where we see strong potential for growth,” said MidAmerican Chairman, President and CEO Greg Abel. “We are joining forces with a company that has more than 100 years of history and a well-established reputation for building and operating excellent power projects.
The agreement encompasses all new natural gas-fueled generation opportunities considered by either TransAlta or MidAmerican in Canada, including TransAlta’s proposed Sundance 7 project, an up to 800-MW project based in Alberta, Canada.
“You need a power plant like Sun 7” to help harness the oil sands potential around Albert, Farrell said. The new Sundance 7 plant could come online in the 2016-2017 time frame, Farrell said.
The TransAlta CEO said MidAmerican will bring a “disciplined” approach to development and favors power plants with contracts lined up. The parties started talks about the partnership earlier this year,
TransAlta is a power generation and wholesale marketing company based in Calgary, Alberta. MidAmerican is a global provider of energy services based in Des Moines, Iowa. MidAmerican’s utility holdings include PacifiCorp. MidAmerican is also part of Warren Buffett’s Berkshire Hathaway family of businesses.