Digest

Fortnightly Magazine - March 2014

M&A

PAR Electrical Contractors won a contract to build part of the 500-kV Tehachapi Renewable Transmission project in California.

Canadian Solar sold two solar power plants totaling 4.4 MW to PSEG Solar Source. The plants have a 20-year offtake agreement with PG&E. Collectively called the PSEG Shasta Solar Farm, the two arrays are built at an elevation exceeding 3,300 feet between Mount Lassen and Mount Shasta in northern California. Construction started in July 2013, with commercial operation expected in early 2014. Blue Oak Energy is providing turnkey EPC services to complete the projects and will provide operations and maintenance services after completion.

TransCanada reached an agreement to sell Cancarb Ltd. and its related power generation facility to Tokai Carbon for $190 million. The transaction is expected to close late in the first quarter of 2014, subject to various approvals. Cancarb produces thermal carbon black, a specialized form of carbon derived from super-heated natural gas, which is used in a wide range of industrial and automotive products. The Cancarb power plant captures waste heat from carbon black production, augmented with natural gas to produce 41 MW of capacity.

Allete Clean Energy finalized the purchase of wind farms in Minnesota, Iowa, and Oregon from AES. Allete acquired the operating wind energy projects for $27 million, and all three wind farms, totaling 231 MW, have power purchase agreements (PPA) in place for their entire electric output. Allete also signed in November an option agreement to acquire a fourth wind farm from AES in mid-2015. Pursuant to that option agreement, Allete will have an option to acquire the 101-MW Armenia Mountain (Penn.) wind farm. That project became operational in 2009 and sells power under two long-term PPAs.

Integrys Energy Group agreed to sell 100 percent of the stock of Michigan utility Upper Peninsula Power Co. (UPPCO) to infrastructure equity investment fund Balfour Beatty Infrastructure Partners LP for $298.8 million. The deal includes UPPCO's electricity distribution operations, excluding its American Transmission Co. holdings.

SCE&G agreed to acquire a 5-percent stake in Units 2 and 3 under construction at the V.C. Summer nuclear station in South Carolina.

Alterra Power sold half of its 51-percent interest in the Dokie 1 wind farm to Fiera Axium Western Energy. Alterra received initial sales proceeds of $28.625 million and could receive further earn-out payments of up to $2.25 million over the next three years depending on asset performance. Alterra will retain 25.5-percent ownership of Dokie 1, and will continue to operate and manage the project.

South Carolina Electric & Gas (SCE&G) and Santee Cooper established an agreement for SCE&G to acquire from Santee Cooper a 5-percent ownership interest in the two new nuclear units currently under construction at V.C. Summer Station in Jenkinsville, S.C. The transaction - which would become effective on the units' completion - increases SCE&G's total stake to 60 percent of the new nuclear units and reduces Santee Cooper's to 40 percent. The purchase price is expected to be approximately $500 million for the entire 5-percent interest based on current project cost. The agreement also provides that Santee Cooper won't transfer any of its remaining ownership interest in the two new units until both units have been completed. The transaction is subject to customary closing conditions, including receipt of necessary regulatory approvals.

Arizona Public Service completed its purchase of Southern California Edison's (SCE) ownership in Units 4 and 5 of the Four Corners Power Plant near Farmington, N.M. As part of its plan - originally announced in November 2010 - APS has permanently closed the plant's older, less efficient Units 1, 2, and 3, and will install additional emission controls on the remaining units. Acquiring SCE's 48 percent interest in the larger Units 4 and 5 will increase APS's total Four Corners capacity from 791 MW to 970 MW. APS now owns 63 percent of Units 4 and 5, which constitute the plant moving forward. The final purchase price for the Southern California Edison share is approximately $182 million.

EDF Renewable Energy acquired the 194-MW Spinning Spur 3 Wind Project from Cielo Wind Power (Cielo). Spinning Spur 3 is located on about 18,000 acres in Oldham County, Texas, 50 miles west of Amarillo. Commercial operation is expected by the end of 2015, using ERCOT's new CREZ transmission lines to deliver power to two municipal utilities, Georgetown Utility Systems and Garland Power & Light, under long-term PPAs.

Transmission

Quanta Power Generation won a contract to build a combined-cycle power plant in Anchorage, Alaska, using two GE LM6000 turbines.

The Northern Pass, a proposed transmission line carrying hydroelectric power to New Hampshire and New England, cleared a regulatory milestone by securing I.3.9 approval by ISO New England, the operators of the region's power grid. The I.3.9 process determines whether Northern Pass can reliably interconnect with the New England grid. By approving the project's I.3.9 application, ISO New England determined Northern Pass will have no significant, adverse effect on the reliability or operating characteristics of the regional energy grid and its participants. All energy projects must secure this approval in order to be connected to the regional power grid.

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Southern California Edison selected Quanta Services' PAR Electrical Contractors to complete construction of segment 7 and portions of segment 8 of its Tehachapi Renewable Transmission Project (TRTP) in California. PAR's scope of work under the contract includes the installation of double circuit 500-kV overhead transmission line, environmental mitigation and compliance, foundation installation, tower erection and conductor installation. Quanta has mobilized resources for the TRTP project and expects segment seven of the project to be completed by year-end and PAR's portions of segment eight to be completed by February 2015.

The Pennsylvania Public Utility Commission approved PPL Electric Utilities's proposed Northeast Pocono Reliability Project, a $335 million project that involves building new electrical substations and a new 230-kV power line running approximately 60 miles. PPL Electric Utilities submitted the project to the PUC in late December 2012, after soliciting public input at 13 community meetings in the project region. The utility is working with various agencies to secure environmental permits. Completion is expected in 2017.

Grid Modernization

Southern Company completed the smart grid development efforts associated with the $165 million Smart Grid Investment Grant awarded to the company by the U.S. Department of Energy in 2009. Through a combination of matching funds and additional investments, the company spent a total of $363 million to accelerate smart grid implementation and make the grid more reliable, efficient and secure.

Siemens won a long-term service contract for a combined-cycle, natural gas turbine power station in Russia.

Honeywell and power management company Stor Generation Ltd. launched a new smart grid program in the U.K. The companies will use Honeywell technology to provide demand response capacity for grid stability, and also to help integrate variable renewable generation. Stor Generation will use Honeywell's Akuacom software as a service (saas) offering to connect with participating facilities and communicate when it's necessary to reduce energy use. Stor Generation will then aggregate and provide the resulting reserves to National Grid for its short-term operating reserve (STOR) initiative.

Georgia Power completed a statewide smart grid improvement project conducted through a multiyear Smart Grid Investment Grant (SGIG) awarded by the Department of Energy (DOE). The $109 million project, which includes $52.5 million in funds from the DOE and $56.5 million from the company, is part of a larger $165 million project that created 73 self-healing networks made up of 174 feeders. Georgia Power says the project deferred the need for an additional 200 MW of generation.

ConEdison Solutions signed a $56 million contract with the U.S. Army Reserve's 99th Regional Support Command to provide energy efficiency services and operations and maintenance support at 90 sites in 11 states. The contract is a component of the U.S. Department of Energy's Energy Savings Performance Contract program. Under this initiative, a limited number of qualified, private-sector energy service providers can provide energy efficiency, renewable energy, and water conservation services to federally owned buildings and facilities. The final design and construction for the project is underway and should be completed in 2015.

Utility Partners of America (UPA) installed nearly 40,000 digital electric meters on behalf of Spokane, Wash.-based Inland Power & Light (Inland P&L). UPA is providing complete installation services including a work-order management system (WOMS), workflow development, customer information system (CIS) interface, and data and inventory management. The meters will provide Inland P&L with diagnostics that will help improve power quality, increase ways to optimize the electrical system and pinpoint outages. The project started in late January 2014 and is expected to be completed by the end of 2015.

Kx Systems was selected to provide its kdb+ database to Ontario, Canada's Independent Electricity System Operator (IESO) to support the retrieval and querying of smart meter data processed by Ontario's meter data management and repository (MDMR) system. Kx Systems' relational database management software will be utilized to support MDMR data retrieval, processing, and analysis. In Ontario, the central MDMR provides a common platform for processing, storing, and managing all hourly meter data in the province. Kdb+ provides unified access to real-time and historical data eliminating the need for multiple different types of databases for transaction processing, data access, and analytics. The IESO is responsible for managing Ontario's bulk electricity power system and operating the wholesale market.

Salt River Project (SRP) signed a long-term agreement with Landis+Gyr to update and expand its advanced metering and prepay system in a phased, 10-year installation across its service territory. The utility plans to deploy Landis+Gyr's Gridstream RF network beginning this summer to support ongoing improvements to the technology used by 142,000 prepay customers. SRP will begin installing more than one million Landis+Gyr E350 AX-SD meters to provide both credit and prepayment options for all their customers.

Generation

The Chilean Ministry of Energy and Corfo (Corporacion de Fomento de la Produccion) selected Abengoa to develop a $1 billion, 110-MW solar plant using tower technology with 17.5 hours of thermal energy storage using molten salts. The project will be located in the Atacama Desert and will be the first solar-thermal plant for direct electricity production in South America. Construction is due to start in the second half of 2014.

Constellation signed an agreement with the City of Los Angeles to design, build, and operate a 27-MW biogas-fired cogeneration plant at L.A. Sanitation's Hyperion treatment plant. The new plant, which will cost approximately $130 million to build, will burn digester gas produced at Hyperion, producing steam and electricity for treatment operations. Constellation and its subcontractors will develop, construct, and operate the cogeneration facility for 10 years, with an option to extend the agreement for five additional years. Commercial operation is expected by the end of 2016.

Element Power US, owner and developer of the Mill Creek Wind Farm, and KCP&L Greater Missouri Operations, have entered a PPA for a 200-MW wind energy facility to be built in Holt County, Mo. The $400 million project will be sited on approximately 25,000 acres under lease with more than 100 landowner partners. Element Power anticipates beginning construction in Q3 2014, with commercial operation expected by the end of December 2015.

First Solar began construction on Phase I of the Barilla solar project in Pecos County, Texas. The 22 MW project is expected to begin commercial operation in mid-2014. First Solar will build, commission and operate the plant and offer the output to customers, including municipal utilities, electric cooperatives, and larger commercial and industrial users.

EDF Renewable Energy announced a 20-year PPA with Southern California Edison (SCE), contracted through the California Renewable Auction Mechanism (RAM) competitive procurement program, for 19.8-MW wind project. The Patterson Pass wind project is a repowering effort whereby older technology is upgraded, allowing for increased generation of clean energy with fewer wind turbines. Approximately 300 Nordtank and Bonus 65-kW turbines, originally installed in 1985, will be removed as part of the development process. EDF Renewable Energy will develop, own, and operate the wind project with SCE purchasing the power generated. Commercial operation is anticipated for the end of 2015. EDF Renewable Services will continue to operate and maintain the project.

Anchorage Municipal Light & Power selected Quanta Power Generation for the 120-MW George M. Sullivan Plant 2 generation replacement project in Anchorage, Alaska. Quanta will provide EPC services for all equipment and facilities for the 2x1 combined-cycle facility, using GE LM6000 combustion turbines. Construction is expected to be complete in September 2016.

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Iberdrola S.A. won a contract for the construction and operation of the 300-MW Baja California III combined-cycle power plant in Mexico. Work on the $270 million plant and associated facilities will begin in April 2014 with commercial operation planned for August 2016. Iberdrola won the bid through an international tender process, which also included a 25-year PPA with the Mexican Federal Electricity Commission (CFE). CFE also will supply the natural gas to fuel the new plant's two GE turbines.

Tri-State Generation and Transmission Association selected Hitachi Power Systems America (HPSA) to design and supply a selective catalytic reduction (SCR) system for its Craig Generation Station Unit 2 in Craig, Colo. The coal-fired unit generates about 428 MW. The SCR system will use Hitachi's catalyst for NOX removal over a wide operating load range throughout the year. Tri-State Generation expects the SCR will help it meet or exceed its NOX emissions-reduction requirements while minimizing sulfur trioxide (SO3) emissions.

Siemens and Fortum signed a long-term service contract for the Nyaganskaya GRES combined cycle power plant in Nyagan, Russia. (GRES is the Russian acronym for "state district power plant," generally steam condenser-type coal-fired boiler plants.) The power station consists of three combined-cycle power units totaling 1,254 MW. The first unit, with a capacity of 420.9 MW, began commercial operation in April 2013. The commercial operation of the second unit began at the end of 2013, and the third unit is currently under construction. Under terms of the long-term agreement, Siemens will provide service and maintenance for the gas turbines, steam turbines, and generators of all three combined-cycle plants for a period of six years.

Enerjisa, a joint venture of Sabanci Holding and E.ON, ordered a turnkey combined-cycle plant from Siemens. Upon completion in the spring of 2016, the Bandirma II in Turkey will have an installed capacity of around 600 MW and an efficiency of over 60 percent. Siemens will also supply the following main components: an SGT5-8000H gas turbine, a model SST5-5000 steam turbine, and an SGen5-3000W water-cooled generator, along with the entire electrical system, a 400 kV high-voltage switchgear installation, and the SPPA-T3000 instrumentation and control system. The order also includes a Benson-type heat recovery steam generator manufactured by NEM and the auxiliary and ancillary systems.