Demand for gas turbines in the USA continues unabated, with Calpine Corp setting the pace in a series of major acquisitions and orders.
A major deal has been the agreement by Calpine to acquire SkyGen Energy from its owners for $450 million – reflecting Calpine’s strategy of becoming a serious competitor to the big US generation companies like Southern Co. SkyGen is 49.9 per cent owned by Wisvest Corp, a subsidiary of Wisconsin Energy Corp, while the remainder is held by Michael Polsky, its founder. The acquisition will see Calpine take control of 6850 MWe of generating capacity.
Calpine has also recently completed a number of other acquisitions, including the rights to the Freestone Energy Centre in Texas. Freestone is a 1000 MWe gas-fired station that is due to begin construction later this year and start commercial operations in 2002. Calpine bought the facility from Entergy with a payment of around $61 million and the assumption of some $147 million in liabilities. Previous payments have been made for the turbines and related equipment. Calpine has also purchased the remaining 50 per cent stakes in two New York gas-fired generation stations that it did not own for $71 million. The Kennedy Airport power plant and the Stony Brook plant have a combined capacity of 147 MW and both have long-term power purchase agreements in place.
In addition, the company recently announced proposals for a strategic alliance with Panda Energy International. The deal involves eight power plants Panda has under development with a combined capacity of around 10 GW. Under the terms of the deal, Panda will take each of the projects to the construction phase, Calpine will have exclusive rights to build, own and operate the facilities. The agreement will also include the Calpine acquisition of 24 GE 7FA gas turbines and 12 steam turbines from Panda that are scheduled for delivery during 2001 and 2002. Calpine is to pay Panda $126 million to acquire the rights to certain projects including the 1000 MWe Oneta project in Oklahoma.
This is in addition to 34 GE 7FAs that Calpine already had on order and a further 24 7FAs that the company ordered for delivery in 2003. In addition, Calpine has placed an order for 21 7FBs from GE, 12 of which are due for delivery in 2003 and the remainder that are due in 2004.
Calpine has also recently ordered a further 36 gas turbines from Siemens Westinghouse, for delivery over the period 2003-2004.
Following all these purchases, Calpine will have more than 50 GWe of capacity either operational, under development or proposed, with a total of no less than 220 turbines. Some 199 of these are gas, the rest steam. Of the gas turbines, 58 come from the acquisitions of Panda and SkyGen. Both the Panda and SkyGen purchases are expected to close this year.
Benefitting from the boom, Siemens Power Generation Group recently put out a press release reporting that it has won orders over $2 billion for power plants, equipment and services over the last few months, mainly in the USA, with the 36 Calpine units the biggest single order.
Also mentioned is an order for three W501G combined cycle power systems for PG&E. This contract also includes servicing and upgrading terms for the plant that is due to come on-line in mid-2003. The equipment will be installed at the 1000 MWe Athens Generating Company site in New York. Elsewhere in the US, the Calumet Energy Project, to be located in Chicago, will see two V84.3A gas turbines deilvered under a turnkey contract. The 308 MWe peaking facility is expected to begin commercial operations in June 2001.
However, although Calpine may be taking on the big generators, Southern has not been complacent, among recent deals is the Potomac Electric Power Company (Pepco) auction of 5889 MWe of generation capacity to Southern Co for $2.65 billion.
Pending regulatory approvals, the transaction is expected to conclude this year, when the unregulated subsidiary, Southern Energy Inc, will acquire four plants, mostly located in Maryland and which are fossil-fired.
