NRG gets US$685 MM financing for a natural gas-fired generating facility

NRG Repowering Holdings LLC has achieved US$685 million financing for the development, construction and operation of the Carlsbad Energy Center, a 558 MW Natural Gas-Fired Generating Facility in California. 

Milbank, Tweed, Hadley & McCloy LLP advised institutional investors and commercial bank lenders in the financing.

The California Energy Commission issued a license in 2012 to NRG to build the project. The need for new generation in the area was urgent. After losing 2,200 MW of capacity with the retirement of the San Onofre Nuclear Generation Station, the region will lose another 965 MW of capacity when the Encina Power Station is retired in 2017 to comply with State regulations governing the use of ocean water for once-through cooling.

Burns & McDonnell and ARB Inc., in a joint venture named Carlsbad Power Constructors, was hired by NRG to provide engineer-procure-construct (EPC) services on a lump-sum, turnkey basis. The plant will be in commercial operation in November 2017.

The project consists of 5 General Electric LMS 100s in a simple-cycle configuration. Each machine will be equipped with inlet evaporative cooling, water injection for nitrogen oxide (NO_x) control, high temperature dry intercooler (including a closed-loop cooling system and fin fan cooler), selective catalytic reduction (SCR) catalyst (including ammonia injection grid and ammonia flow control unit), carbon monoxide (CO) catalyst, tempering air fan to permit use of conventional catalyst, and a 90-foot-high stack.

The electrical output from one of the CTGs will be connected to an existing 138-kV switchyard via two winding generator step-up transformers. The other four CTGs will be connected to an existing 230-kV switchyard via two winding generator step-up transformers.

The total project cost amounts to US$2.2 billion.

The project will sell the electrical output and capacity to San Diego Gas & Electric. The energy produced from the Carlsbad Energy Center is expected to complement the growing amount of renewable energy, private solar, energy storage, electric vehicles and other clean energy innovations being added every day to the modern grid

Jonathan Green, partner and co-chair of Milbank’s Project, Energy and Infrastructure Finance Group, said:

“We’re extremely pleased to have represented the institutional investors and commercial banks on this financing. The Carlsbad Energy Center is an important green-field gas fired generation project serving one of California’s major population centers, and the transaction demonstrates the vitality of the bank/bond financing market for new high quality infrastructure projects.”