NRG Energy (NYSE: NRG) has begun construction of a 360-MW, natural gas-fired peaking plant at its PH Robinson site near Houston at a cost of approximately $400 per kilowatt, a significant discount to typical new build costs.
The cost savings are primarily driven by the repurposing of six General Electric 7E, economical, fast-start combustion turbines acquired in the secondary market, NRG noted in its Nov. 5 quarterly earnings statements. The units require no water for cooling, making them well-suited to operate in water-constrained Texas. With their fast-start capability, the peaking units have the potential to help integrate renewable power from intermittent wind and solar generation into the Electric Reliability Council of Texas (ERCOT) grid. The project will be partially financed through $43m of Ike bonds.
NRG also said that it was selected by Southern California Edison (SCE) for a 20-year power purchase agreement, which is subject to California Public Utilities Commission approval, for the repower of NRG’s Mandalay facility in Oxnard with 262 MW of new simple-cycle generation. NRG was also selected by SCE to install 178 MW of “Preferred Resources,” including both demand response and energy efficiency products at sites across southern California.
On Nov. 4, NRG entered into a definitive agreement with NRG Yield to sell the following facilities for total cash consideration of $480m, subject to customary working capital adjustments, plus the assumption of $746m in project debt:
- Walnut Creek – 500 MW natural gas facility located in City of Industry, California;
- Tapestry – three wind facilities totaling 204 MW, including Buffalo Bear (19 MW) in Oklahoma, Taloga (130 MW) in Oklahoma, and Pinnacle (55 MW) in West Virginia; and
- Laredo Ridge – 81 MW wind facility located in Petersburg, Nebraska.
NRG offers details on Robinson project
NRG Energy on Nov. 5 separately announced that construction has begun on the Robinson project in Texas.
“NRG is working hard to meet the electricity needs of the Houston area today and in the future as our region continues to grow,” said John Ragan, executive vice president of NRG and president of NRG’s Gulf Coast Region. “The Houston area and, in fact the entire state, is challenged with shrinking reserve margins. Rather than building costly new transmission lines and impacting hundreds of private property owners, NRG is investing in new generation, close to the homes and businesses that need it. This is the most efficient, cost-effective way to ensure reliability for this region.”
The new facility will be located on a 230-acre site which was once part of the former PH Robinson power plant. The six GE units require no water for cooling making them well-suited to operate in water-constrained Texas. The gas turbines will be relocated from a site in New Albany, Mississippi, to the Houston area at a location NRG already owns and is immediately adjacent to the switchyard where they expect to connect to the transmission grid.
“While Texas needs this additional, flexible power, the low price of power in the state makes it very difficult to finance and build new power plants,” added Ragan. “We have worked hard to make these units economic so that we can add them with no ratepayer dollars involved.”
The facility will be built by a partnership between BTEC Turbines and Rockland Capital, the current owners of the New Albany plant. BTEC is experienced in upgrading and relocating gas turbines. BTEC will perform the engineering, procurement and construction of the new power plant which includes the dismantling and shipment of the turbines from Mississippi. The plant is expected to be transferred to NRG upon completion. BTEC estimates the plant will generate approximately 200 jobs at the peak of construction and is anticipated to be completed in late 2015.
In addition, NRG said it is in final stages of the permitting process for two large natural gas-fired plants in the Houston region. The company has been granted a permit from the Texas Commission on Environmental Quality for a new 850-MW combined cycle plant and expects to receive environmental permits for a second 850-MW facility in early 2015.
“When economics allow us to build these additional units, NRG wants to be ready to bring them online as quickly as possible to meet the growing demand in Houston with new natural gas plants,” Ragan added.
NRG didn’t offer specifics on these two projects in the Nov. 5 announcement. But in a July 7 filing with the Texas Public Utility Commission in a dispute over power imports into the Houston region, NRG said that in that region it plans two projects: the Cedar Bayou Unit 5, 2×1 combined cycle gas turbine facility (about 700 MW net); and SR Bertron Unit 5, 2×1 combined cycle gas turbine facility (about 700 MW net).