TransAlta Corp. (TSX: TA)(NYSE: TAC) said Sept. 17 that CalEnergy LLC, a joint venture it has with MidAmerican Energy Holdings, has executed a 50-MW long-term contract for renewable geothermal power with the Salt River Project (SRP).
Highlights of project and contract include:
- duration of power purchase agreement is 24 years (2016-2039);
- contract with SRP reflects 15% of the capacity of CalEnergy’s geothermal facilities, bringing the total contracted capacity to 40%;
- CalEnergy continues its work to market the remainder of the capacity from the 10 geothermal facilities, as the existing contracts roll off; and
- through CalEnergy, TransAlta continues to invest in renewable power options for customers.
One of TransAlta’s strategic approaches to balance sheet strength remains execution of long term contracts for its assets, which provides reliability of power and price for its customers, while also providing a consistent return on investment for shareholders, the company noted.
The Salt River Project said in its own Sept. 17 statement that it has signed an agreement with CalEnergy for the purchase of 50 MW of geothermal energy from a number of plants located in the Imperial Valley of southern California. The Salton Sea Known Geothermal Resource Area is one of the world’s most prolific regions for the production of renewable energy, SRP noted.
SRP’s purchase will begin with 18 MW in 2016 and grow to the full 50 MW in 2019. The agreement will allow SRP to continue providing its customers with sustainable energy from these facilities until 2039. The geothermal power generated by the project will offset approximately 460 million pounds of CO2 emissions each year .
SRP said it also has agreements to purchase geothermal energy from the Hudson Ranch facility in southern California which began operating in 2012, and the Cove Fort plant currently under construction in Utah.
Under SRP’s Sustainable Portfolio goals, SRP must meet 20% of its retail electricity requirements through sustainable resources by the year 2020. SRP’s sustainable portfolio is currently providing more than 10% of retail energy needs with sustainable resources such as solar, wind, landfill gas, geothermal, biomass, hydro and energy-efficiency measures.
SRP is the largest provider of electricity to the greater Phoenix, Ariz., area, serving nearly 970,000 electric customers.
MidAmerican says the SRP deal builds on an earlier deal with Riverside
“It is exciting to welcome Salt River Project to our list of growing customers and to send renewable baseload power to Arizona,” said Steve Larsen, president of CalEnergy. “This contract builds on our earlier agreement with the city of Riverside and will bring the benefits associated with our geothermal portfolio to key customers for the next 30 years.”
Earlier this year, the company announced its new portfolio contract structure for geothermal marketing. Rather than contracting power from individual facilities, the facilities are marketed together as a group providing a more diversified supply and additional flexibility regarding volume and timing to meet customers’ renewable energy needs. Customers have the ability to secure contracts in increments as low as 5 MW. CalEnergy will be investing more than $1bn in capital improvements to its existing facilities to sustain its Salton Sea facilities for another 30 years.
CalEnergy was formed by TransAlta and MidAmerican Energy Holdings to lead the remarketing initiative required to extend the life of CE Generation LLC’s 10 geothermal generating facilities in the Salton Sea Known Geothermal Resource Area. MidAmerican Geothermal, a subsidiary of MidAmerican Renewables, oversees the 10 geothermal facilities in California’s Imperial Valley.
TransAlta highlights other recent contracting activity
This isn’t the only recent power contract activity for TransAlta. Highlights of other recent contract executions for TransAlta include:
- In August, TransAlta announced the recontracting of its Ottawa gas plant (Central Canada) with the Ontario Power Authority under a 20-year long-term contract, 71.8 MW;
- In June, CalEnergy announced the first long-term contract under a new remarketing strategy with the city of Riverside in Calif., 24-year contract, 86 MW;
- Also in June, TransAlta announced for the Centralia coal plant (Washington state) an 11-year contract signed with Puget Sound Energy (PSE). Under the deal PSE will acquire 180 MW of firm, base-load coal transition power starting in December 2014. In the following 12 months the contract increases to 280 MW. From December 2016 to December 2024, the contract is for 380 MW, and volume drops to 300 MW in the last year.
TransAlta is a power generation and wholesale marketing company focused on creating long-term shareholder value. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta’s focus is to efficiently operate geothermal, wind, hydro, natural gas and coal facilities in order to provide customers with a reliable, low-cost source of power.