The in-construction gas-fired Shepard Energy Centre and the K2 Wind project are both expected to commence commercial operations in 2015 and to have a positive impact on earnings and funds from operations, said Capital Power Corp. (TSX:CPX) in a Feb. 23 earnings statement.
Among the recent highlights for the Canada-based company:
- Genesee 4 and 5 – In April 2014, Capital Power and ENMAX executed a purchase and sale agreement in support of a joint arrangement agreement to jointly develop, construct and operate the 1,060-MW Genesee 4 and 5 in Alberta, located at the Genesee coal plant site. The joint arrangement agreement provides for, among other things, an agreement for ENMAX Corp. to purchase approximately 225 MW from Capital Power for eight years. The joint arrangement agreement closing occurred in July 2014. On Jan. 8, Capital Power and ENMAX announced that the project received all major regulatory approvals from the Alberta Utilities Commission and Alberta Environment and Sustainable Resource Development. They also announced the execution of agreements with Mitsubishi Hitachi Power Systems for the supply and maintenance of the world’s most advanced J-Class natural gas turbine technology in commercial operation with a targeted completion date as early as 2018. The capital cost for the project, excluding interest to fund construction and refundable transmission system contribution payments, is expected to be approximately C$1.4 billion.
- Acquisition of renewable development sites – In December 2014, Capital Power acquired Element Power US LLC for $C18 million (US$15 million) net of cash acquired. The purchase also provides for contingent consideration of C$12 million (US$10 million) which is payable upon reaching specified milestones in connection with the development sites acquired. Element Power provides Capital Power with a portfolio of attractive wind and solar energy development sites in the United States. The development sites consist of 10 wind and four solar sites including a North Carolina site with a 15-MW solar contract with Duke Energy Progress. The acquisition also includes Macho Springs, a 50-MW wind project in New Mexico that has been operating since 2011 under a 20-year power purchase arrangement with Tucson Electric Power.
- Genesee coal mine – Capital Power is a party to various agreements with Prairie Mines & Minerals Royalty Ltd. (PMRL) in relation to the operations of the Genesee coal mine. Under these agreements, PMRL operates the Genesee coal mine. In connection with the 2014 acquisition by Westmoreland Coal of PMRL and the 2014 acquisition by Altius Minerals Corp. of the royalty assets of PMRL, the agreements have been amended to: confirm the acquisitions by Westmoreland and Altius; provide for certain amendments to the agreements; and provide for a payment to Capital Power of C$20 million upon completion of the acquisitions (the payment was received in the second quarter of 2014).
- Construction of K2 Wind Power Project commences – In March 2014, construction of the K2 Wind Power Project commenced following the successful completion of an C$850 million financing in the form of a construction loan that will convert to long-term project debt once K2 Wind starts commercial operations. K2 Wind is a 270-MW project located in Goderich, Ontario, that is under joint development by Samsung Renewable Energy, Pattern Energy Group LP and Capital Power with operations expected to commence in the second half of 2015. The total estimated project cost has been revised upward to C$930 million from the previous upper end of range of C$900 million primarily due to foreign exchange changes on U.S. contract deliverables. Capital Power’s share is C$310 million.
- Shepard Energy Centre – This is an 800-MW (Capital’s share is 400 MW) natural gas-fired combined cycle project expected for operation in 2015. It is a merchant plant with a tolling agreement due to expire in 2035 for 50% of owned capacity plus additional 25% contracted for 2015 to 2017. In December 2012, Capital Power and ENMAX signed a joint agreement to build, own, and operate the 800-MW Shepard Energy Centre in Calgary, Alberta.
Capital Power is a growth-oriented North American power producer headquartered in Edmonton, Alberta. It develops, acquires, operates and optimizes power generation from a variety of energy sources. Capital Power owns more than 2,700 MW of power generation capacity at 15 facilities across North America and owns 371 MW of capacity through its interest in the acquired Sundance power purchase arrangement. An additional 1,020 MW of owned generation capacity is under construction or in advanced stages of development in Alberta and Ontario. The Alberta plants include the Genesee 1-3 coal units.