Calpine reports on status of various power development projects

Calpine Corp. (NYSE: CPN) said in a Feb. 12 earnings statement that its 760-MW dual-fuel, combined-cycle York 2 project in Pennsylvania is now under construction, with commercial operations to commence during the second quarter of 2017.

The company also noted that in February of this year, it completed the purchase of the Granite Ridge Energy Center, a New Hampshire power plant with a nameplate capacity of 745 MW (summer peaking capacity of 695 MW), for approximately $500 million, excluding working capital adjustments. The addition of this modern natural gas-fired, combined-cycle plant meaningfully increases Calpine’s capacity in the constrained New England market. The power plant features two combustion turbines, two heat recovery steam generators and one steam turbine.

In the area of power development projects for Calpine:

East:

  • Garrison Energy Center: This Delaware plant commenced commercial operations in June 2015, bringing online approximately 309 MW of combined-cycle, natural gas-fired capacity with dual-fuel capability. The power plant features one combustion turbine, one heat recovery steam generator and one steam turbine. Calpine noted that it is in the early stages of development of a second phase of the Garrison Energy Center that will add approximately 430 MW of dual-fuel, combined-cycle capacity. PJM Interconnection has completed its feasibility study of the project and the system impact study is underway.
  • York 2 Energy Center: This is a 760-MW dual-fuel, combined-cycle project that will be co-located with the company’s York Energy Center in Peach Bottom Township, Pennsylvania. Once complete, the plant will feature two combustion turbines, two heat recovery steam generators and one steam turbine. The project’s capacity cleared PJM’s 2017/2018 and 2018/2019 base residual auctions. The project is now under construction, and Calpine expects commercial operations to commence during the second quarter of 2017. PJM has completed the interconnection study process for an additional 68 MW of planned capacity at the York 2 Energy Center. This incremental 68 MW of planned capacity cleared the 2018/19 base residual auction.
  • Mankato Power Plant Expansion: In a February 2015 order, the Minnesota Public Utilities Commission concluded a competitive resource acquisition proceeding and selected a 345 MW expansion of the Mankato Power Plant, authorizing execution of a 20-year power purchase agreement (PPA) between Calpine and Xcel Energy (NYSE: XEL). The PPA was executed in April 2015 and remains subject to approval by the North Dakota Public Service Commission. Commercial operation of the expanded capacity may commence as early as 2019, subject to requisite regulatory approvals and applicable contract conditions.
  • PJM and ISO-NE Development Opportunities: Calpine said it is currently evaluating opportunities to develop additional projects in the PJM and ISO-NE market areas that feature cost advantages such as existing infrastructure and favorable transmission queue positions. These projects are continuing to advance entitlements (such as permits, zoning and transmission) for their potential future development when economical.
  • Osprey Energy Center: During the fourth quarter of 2014, Calpine executed an asset sale agreement for the sale of its Osprey Energy Center to Duke Energy Florida for approximately $166 million, excluding working capital and other adjustments. The sale will be consummated in January 2017 upon the conclusion of a 27-month PPA. In July 2015, the transaction was approved by the Federal Energy Regulatory Commission and the Florida Public Service Commission. This sale represents a strategic disposition of a power plant in a wholesale power market dominated by regulated utilities.

Texas:

  • Guadalupe Peaking Energy Center: In April 2015, Calpine executed an agreement with Guadalupe Valley Electric Cooperative (GVEC) that will facilitate the construction of a 418-MW natural gas-fired peaking power plant to be co-located with Calpine’s Guadalupe Energy Center. Construction of the Guadalupe Peaking Energy Center (GPEC) may commence at Calpine’s discretion, so long as the power plant reaches commercial operation by June 1, 2019. When the power plant begins commercial operation, GVEC will purchase a 50% ownership interest in it. Once built, GPEC will feature two fast-ramping combustion turbines capable of responding to peaks in power demand.

All Segments:

  • Turbine Modernization: Calpine continues to move forward with a turbine modernization program. Through the end of 2015, It had completed the upgrade of 13 Siemens and eight General Electric turbines totaling approximately 210 MW and has committed to upgrade three additional turbines. In addition, it has begun a program to update dual-fueled turbines at certain East Region power plants.

Seven plants ran particularly hard in 2015

In other areas of the business, Calpine reported that seven gas-fired plants in 2015 had full-year capacity factors greater than 70%: Channel, Hermiston, Morgan, Pasadena, Pastoria, Pine Bluff and Stony Brook. The Texas Region had the highest full year generation volume on record.

In September 2015, a wildfire spread to Calpine’s Geysers geothermal assets in Lake and Sonoma counties, California, affecting five of its 14 power plants in the region which sustained damage to ancillary structures such as cooling towers and communication/electric deliverability infrastructure. The wildfire was subsequently contained, and the Geysers assets are generating renewable power for customers at approximately three-quarters of the normal operating capacity. Calpine expects its insurance program to cover the repair and replacement costs as well as net revenue losses after deductibles are met. Once repairs are completed, Calpine expects generation capacity at Geysers to be restored to pre-fire levels.

During 2015, Calpine entered into the following:

West:

  • A PPA with Marin Clean Energy to provide up to 65 MW of power from the Delta Energy Center and other northern California power plants commencing in April 2015 and extending through December 2017;
  • A ten-year PPA with Southern California Edison for 50 MW of capacity and renewable energy from the Geysers assets commencing in January 2018, with the PPA remaining subject to approval by the California Public Utilities Commission (CPUC);
  • A ten-year PPA with Southern California Edison for 225 MW of capacity and renewable energy from the Geysers assets commencing in June 2017 was approved by the CPUC;
  • A one-year resource adequacy contract with Southern California Edison for 238 MW from the Pastoria Energy Center commencing in January 2018; and
  • A three-year PPA with the San Francisco Public Utilities Commission to provide, on average, approximately 43 MW of energy and renewable energy annually, commencing in May 2016.

Texas:

  • A three-year PPA with Brazos Electric Power Cooperative to provide 300 MW of energy from Calpine’s Texas power plant fleet commencing in January 2016;
  • A three-year PPA with Pedernales Electric Cooperative to provide approximately 140 MW of energy from the Texas power plant fleet commencing in January 2017;
  • A two-year PPA with Guadalupe Valley Electric Cooperative to provide approximately 270 MW of energy from the Texas power plant fleet commencing in June 2017. The execution of this PPA will facilitate the construction of the 418 MW natural gas-fired peaking power plant to be co-located with the Guadalupe Energy Center; and
  • Extension of an existing PPA with the South Texas Electric Cooperative to supply the Magic Valley Electric Cooperative’s full load requirements for ten years beyond 2021. Magic Valley Electric Cooperative’s peak summer load in 2015 was 490 MW.

East:

  • A 20-year PPA with Xcel Energy to provide up to 345 MW of capacity and energy from the Mankato Power Plant expansion when commercial operations commence and transmission-related upgrades have been completed; and
  • A ten-year PPA with the Tennessee Valley Authority for 615 MW of energy and capacity from the Morgan Energy Center commencing in February 2016.

Calpine is America’s largest generator of electricity from natural gas and geothermal resources. Its fleet of 84 power plants in operation or under construction represents more than 27,000 MW of generation capacity.

In terms of other projects that Calpine has been pursuing lately that were not mentioned in the Feb. 12 earnings report, Generation Hub has reported on:

  • Calpine’s Mission Rock Energy Center LLC filed a Dec. 30, 2015, Application for Certification at the California Energy Commission on a 255-MW project. Mission Rock wants to construct and operate a power plant in Ventura County, California, approximately two miles west of Santa Paula, near State Highway 126. The Mission Rock Energy Center project is a natural gas-fired facility. Mission Rock would also provide 100 MWhr (25 MW x 4 hours) of battery storage and synchronous condenser clutch technology to provide ancillary and grid reliability services. The five General Electric LM6000 combustion turbine generators would each be capable of generating approximately 57 MW (gross) at base load.
  • Calpine thinks an Entergy (NYSE: ETR) request for proposals for new power capacity in Louisiana was improperly skewed to favor Entergy’s own self-build option and that the outright sale of Calpine’s 576-MW, partially-built Washington Parish Energy Center to Entergy is a more cost-effective option. Those contentions were outlined in testimony that Calpine filed on Jan. 26 with the Louisiana Public Service Commission. Subsidiaries of Entergy are seeking commission approval of the 980-MW St. Charles Energy Center. The Washington Parish Energy Center was designed as a nominal 576 MW (winter rating for General Electric 7FA.03 turbines), 2x2x1 natural gas-red combined cycle plant located near Bogalusa, Louisiana. The project has a valid Generation Interconnection Agreement (GIA) from 2001 that was grandfathered by the Midcontinent ISO.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.