New Billion-Dollar NGCC Proposed for Virginia

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Virginia is becoming the home of the billion-dollar natural gas combined-cycle (NGCC) generators. A unit of Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) recently completed two such mega-projects, and currently is building a third large, gas-fired generation project. Now another firm, Matex Virginia Power LLC (Chesapeake, Virginia), has proposed building a 1,400-megawatt (MW) NGCC in southern Virginia that is expected to be fed by the proposed Atlantic Coast natural gas pipeline. The Matex power plant, with a total investment value (TIV) of about $1.26 billion, is scheduled to kick off construction in early 2019, and be operational by late 2021.

Infrastructure giant Macquarie Infrastructure Corporation (NYSE:MIC) (New York, New York), a U.S. affiliate of Macquarie Group Limited (Sydney, Australia), is developing the Matex project. It applied for permits from the City of Chesapeake, Virginia, in September. As proposed, the project will have three gas turbines and one steam turbine. It would be built on land owned by a sibling organization, International-Matex Tank Terminals, next to the company's fuel and fertilizer tanks, according to a report in The Virginian-Pilot newspaper.

The project is expected to be fueled by gas from the proposed Atlantic Coast Pipeline, a 550-mile long pipeline being developed by a consortium led by Dominion. That project is designed to connect West Virginia, Virginia and North Carolina. For more on that pipeline project, see December 1, 2014, article - Proposed Pipeline Would Bring Gas from Marcellus, Utica Shales to North Carolina, Virginia. It is expected to begin turning dirt late next year and be operating by late 2018.

The Matex generator is expected to bring up to 400 temporary construction jobs to the area, the company projected. The company has not selected an engineering, procurement and construction (EPC) firm. A bid to select an EPC is expected to be released late next year. The developer has proposed building the Matex plant adjacent to Dominion Virginia Power's shuttered Chesapeake Energy Center, a 675-MW, coal-fired plant that was closed last year.

In a recent conference call with investors, reported by The Virginian-Pilot, Macquarie Chief Executive James Hooke said the Chesapeake region was a good opportunity because "we've got a relatively unique real estate footprint" with appropriate zoning, access to gas pipelines and electricity transmission cables already in place. The Matex plant reportedly will be a merchant generator, selling into the Pennsylvania-New Jersey-Maryland (PJM) Interconnection.

Owners of coal-fired generation in and around the PJM Interconnection have been closing plants in response to tougher environmental restrictions and the widespread availability of low-cost natural gas. To replace that capacity, and to meet strong customer load growth, Dominion's units have been building gas-fired generation capacity. For more on this, see May 11, 2016, article - Dominion Virginia Power Gets Approval for Next Billion-Dollar NGCC; April 23, 2015 article - Dominion Unveils Plans for Another $1 Billion-plus NGCC; and April 7, 2015, article - Dominion Expects to Spend $8.5 Billion to Meet Growing Electricity Demand.

Engineering News Record reported PJM (Valley Forge, Pennsylvania) expects 5,100 MW of generation capacity in that reliability area to be replaced from plants slated to retire by 2020. PJM is the regional transmission organization (RTO) operating the electric grid serving more than 61 million people in 13 states and the District of Columbia.

Every spring, PJM conducts an annual capacity market for power supplies three years into the future. This past spring's auction brought bids for 5,374 MW of new generation, but at a clearing price that was lower than in the past two years, which could impair the economics of new generation construction.

"It's great to see another large, gas-fired power project under development in the PJM, an area where new generation is needed," said Britt Burt, Industrial Info's vice president of global research for the Electric Power Industry. "But building new generators is only half the story: To keep the lights on, you're going to need new gas pipelines built to feed those new generators. Any delays in permitting or construction for proposed gas pipelines in the area could mean a delay in power plant construction."

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