Shawville natural gas conversion should be done in Q4, NRG says

NRG Energy (NYSE:NRG) expects the 597-MW Shawville natural gas conversion project in Pennsylvania will be completed during the fourth quarter of this year while several major gas conversion projects have already been finished.

The recently-completed fuel conversion projects such as New Castle (325 MW) in Pennsylvania; Joliet (1,326 MW) in Illinois and (638 MW) Avon Lake in Ohio were noted by NRG CEO Mario Gutierrez during an Aug. 9 quarterly earnings call with financial analysts.

In addition, NRG expects to finish its environmental control upgrade project at Powerton in Illinois this year.

In its prepared materials, NRG gave brief updates on new natural gas generation. The projects include:

  • The 360-MW Bacliff (formerly known as Cielo Lindo/Robinson) peakers in Texas are expected to be completed this year.
  • The 527-MW Carlsbad peakers in California are currently scheduled for completion in the first half of 2018 — although a legal appeal is pending regarding a contract with the Sempra Energy (NYSE:SRE) utility San Diego Gas and Electric (SDG&E).
  • The 333-MW Canal peaker in Massachusetts and 262-MW Puente peaker are currently scheduled for completion in 2019 and 2020 respectively, according to NRG materials. The Puente peaking plant is still subject to regulatory approvals in California.

During the conference call, NRG officials touted solid performance by the generation business, especially considering the weak commodity markets.

“We have the largest and most diverse fleet in the country” among independent power producers, Gutierrez said. “We are able to handle downturns better than others,” CEO added

Uncertainty over regional haze rules in Texas could delay decisions to retire aging units, Gutierrez said. But overall, Gutierrez believes that Texas is one of the strongest markets in the nation.

There was a “slow start to summer” in the Electric Reliability Council of Texas (ERCOT) market, the NRC CEO said.  There was a “lack of scarcity prices despite strong load due to wind over-performance in July and healthy gird,” NRG said in its slides that accompanied the presentation.

The PJM Interconnection is something of a different story. “The massive turnover from coal and oil to natural gas is starting to influence spark spreads,” Gutierrez said.

NRG said that roughly 30,000 MW of fossil capacity in PJM is being retired between 2010 and 2019.  Also “100% capacity performance” is required in 2020/2021 going forward in PJM, NRG said in its slide presentation.

The company is reducing its previously-planned capital spending for 2016 and 2017 by $650m.

NRG recorded a net loss of $276m for the second quarter of 2016, compared with a net loss of $9m in 2Q 2015, driven by $198m in impairments and the loss on sale of assets and $80m loss on debt extinguishment

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.