Calpine Corp. (NYSE: CPN) said in its April 29 earning statement for the first quarter of this year that it made a number of moves in the quarter, including the February purchase of Granite Ridge Energy Center, a plant with a nameplate capacity of 745 MW (summer peaking capacity of 695 MW), for about $500 million, excluding working capital and other adjustments.
The addition of this modern, natural gas-fired, combined-cycle plant in New Hampshire meaningfully increased 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 news related to Calpine’s growth and portfolio management:
- Garrison Energy Center: Calpine is in the early stages of development of a second phase of the Garrison Energy Center in Delaware that will add approximately 450 MW of dual-fuel, combined-cycle capacity. PJM Interconnection has completed the project’s system impact study and the facilities study is underway. These are steps in PJM’s power project queue process.
- York 2 Energy Center: York 2 Energy Center is a 760 MW dual-fuel, combined-cycle project that will be co-located with Calpine;s York Energy Center in Peach Bottom Township, Pennsylvania. The pplant 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. Commercial operations are 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 February 2015, 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 PPA between Calpine and Xcel Energy‘s Northern States Power. The PPA was executed in April 2015 and satisfied final regulatory approval requirements in March 2016. Commercial operation of the expanded capacity is expected by June 1, 2019.
- PJM and ISO-NE Development Opportunities: Calpine is currently evaluating opportunities to develop additional projects in the PJM and the ISO New England 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: Calpine executed an asset sale agreement in the fourth quarter of 2014 for the sale of its gas-fired Osprey Energy Center to Duke Energy Florida for approximately $166 million, excluding working capital and other adjustments, which will be consummated in January 2017 upon the conclusion of a 27-month PPA. The sale has received FERC and state regulatory approvals and represents a strategic disposition of a power plant in a wholesale power market dominated by regulated utilities.
- 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 plant to be co-located with Calpine’s Guadalupe Energy Center. Under the agreement, 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 GPEC. Once built, GPEC will feature two fast-ramping combustion turbines capable of responding to peaks in power demand.
- South Point Energy Center: On April 1, 2016, Calpine entered into an asset sale agreement for the sale of substantially all of the assets of its South Point Energy Center to Nevada Power d/b/a NV Energy. The sale is subject to certain conditions precedent, as well as federal and state regulatory approvals, and is expected to close no later than the first quarter of 2017. The natural gas-fired, combined-cycle plant is located on the Fort Mojave Indian Reservation in Mohave Valley, Arizona, and has a summer peak capacity of 504 MW. This deal supports a Calpine effort to divest non-core assets outside its strategic concentration.
- Turbine Modernization: Calpine continues to move forward with a turbine modernization program. Through March 31, 2016, it has completed the upgrade of 13 Siemens and eight General Electric turbines totaling about 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.
In September 2015, a wildfire spread to Calpine’s Geysers geothermal assets in Lake and Sonoma counties, California. The wildfire affected five of Calpine’s14 power plants in the region, which sustained damage to ancillary structures such as cooling towers and communication/electric deliverability infrastructure. The Geysers assets are currently generating renewable power for customers at more than 80% of the normal operating capacity and will be restored to pre-fire levels once repairs are completed, which is expected during the third quarter of 2016.
Calpine believes the repair and replacement costs, as well as its net revenue losses relating to the wildfire, will be limited to insurance deductibles of approximately $36 million, all of which was recognized in 2015. Any losses incurred in 2016 related to the wildfire will be primarily offset by insurance proceeds, when such proceeds are realizable.
For Calpine, commercial operations achievements included:
- Calpine entered into a new ten-year PPA with Tennessee Valley Authority to provide 615 MW of energy and capacity from the Morgan Energy Center commencing in February 2016.
- Calpine entered into a new five-year PPA with a third party to provide 50 MW of capacity from its RockGen Energy Center commencing in June 2017, which increases to 100 MW of capacity commencing in June 2019.
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 megawatts of generation capacity.