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Released June 13, 2017 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Construction began last week on a 644-megawatt (MW) natural gas-fired, combined-cycle power plant in Southern California, five years after the developer sought regulatory approval to build it.
The combined-cycle unit is being constructed by a unit of Kiewit (Omaha, Nebraska) for AES Corporation (NYSE:AES) (Arlington, Virginia). When completed in 2020, the plant's output will be sold to Southern California Edison (SCE) (Rosemead, California), a unit of SCE Corporation (NYSE:SCE) (Rosemead), under a 20--year power-purchase agreement (PPA), AES Public Affairs manager Dalia Gomez told Industrial Info.
The generating station will cool its equipment with air, not water. California has limited the ability of power plants to use seawater to cool their equipment. The power plant will cost an estimated $500 million to build.
The new Huntington Beach Power Station is being constructed next to an existing plant, also called Huntington Beach, which also is owned by AES. When the facility is built, AES will tear down the existing Huntington Beach plant, a four-unit, 450-MW gas-fired power complex that began operating about 60 years ago. The existing Huntington Beach station continues to operate, and will only be shut down and demolished in 2020, after the new plant is running.
Five years ago, when AES asked California regulators for a license to build a power plant, AES envisioned constructing a 939-MW facility, Gomez said. But changes in the California electric market caused AES to downsize its plans. Instead of a 939-MW facility, AES plans to build a 644-MW plant. It also may add a 200-MW simple-cycle generator on that site, assuming it can find someone that will take the electricity. If it can't, AES will not build that 200-MW facility, she added. Gomez said AES was not currently in negotiations with a counter-party to take the electricity from the potential 200-MW simple-cycle unit.
As to why AES has not yet found a counter-party to take the generation from the potential 200-MW simple-cycle plant, Gomez would not speculate. However, in the five years since 2012, when AES originally filed its application to build new generation at the Huntington Beach site, the state's electricity market has gone through a number of significant changes, some of which could help gas-fired generation and some of which could hurt it. For example:
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The combined-cycle unit is being constructed by a unit of Kiewit (Omaha, Nebraska) for AES Corporation (NYSE:AES) (Arlington, Virginia). When completed in 2020, the plant's output will be sold to Southern California Edison (SCE) (Rosemead, California), a unit of SCE Corporation (NYSE:SCE) (Rosemead), under a 20--year power-purchase agreement (PPA), AES Public Affairs manager Dalia Gomez told Industrial Info.
The generating station will cool its equipment with air, not water. California has limited the ability of power plants to use seawater to cool their equipment. The power plant will cost an estimated $500 million to build.
The new Huntington Beach Power Station is being constructed next to an existing plant, also called Huntington Beach, which also is owned by AES. When the facility is built, AES will tear down the existing Huntington Beach plant, a four-unit, 450-MW gas-fired power complex that began operating about 60 years ago. The existing Huntington Beach station continues to operate, and will only be shut down and demolished in 2020, after the new plant is running.
Five years ago, when AES asked California regulators for a license to build a power plant, AES envisioned constructing a 939-MW facility, Gomez said. But changes in the California electric market caused AES to downsize its plans. Instead of a 939-MW facility, AES plans to build a 644-MW plant. It also may add a 200-MW simple-cycle generator on that site, assuming it can find someone that will take the electricity. If it can't, AES will not build that 200-MW facility, she added. Gomez said AES was not currently in negotiations with a counter-party to take the electricity from the potential 200-MW simple-cycle unit.
As to why AES has not yet found a counter-party to take the generation from the potential 200-MW simple-cycle plant, Gomez would not speculate. However, in the five years since 2012, when AES originally filed its application to build new generation at the Huntington Beach site, the state's electricity market has gone through a number of significant changes, some of which could help gas-fired generation and some of which could hurt it. For example:
- The costs of utility-scale windpower and photovoltaic solar generation have continued to fall, making those renewable energy resources more competitive with electricity generated by fossil fuels.
- Electricity storage projects have moved out of the lab and into the field, particularly in California. For more on that, see May 15, 2017, article - Energy Storage: Dynamic Business That Could Transform the Power Industry.
- California increased its renewable portfolio standard (RPS). By 2030, 50% of electricity delivered in the state must come from renewable resources. For more on that, see January 27, 2015, article - California Governor: 50% of Electricity from Renewables by 2030. Prior to that step, California's RPS--33% by 2020--was one of the highest in the nation.
- SCE's two-unit, 2,150-MW San Onofre Nuclear Generating Station (SONGS) was closed in mid-2013.
- Pacific Gas & Electric (PG&E) (San Francisco, California), a unit of PGE Corporation (NYSE:PCG) (San Francisco, California), decided not to renew its license on its two-unit, 2,240-MW Diablo Canyon Nuclear Generating Station when those units' licenses expire in 2024 and 2025. PG&E intends to replace Diablo Canyon's lost generation with a combination of non-emitting renewable generation and customer efficiency programs. For more on that, see July 20, 2016, article - Diablo Canyon Proposal: A Turning Point for the U.S. Nuclear Industry?
- A months-long leak at Aliso Canyon, a large gas-storage facility in Southern California, created concerns among utilities and power plant owners about potential blackouts and the reliability of gas supply. The facility has been closed since early 2016. The facility is operated by Southern California Gas Company (Los Angeles, California), a unit of Sempra Energy (NYSE:SRE) (San Diego, California).
- The state enacted a law prohibiting the importation of electricity generated from coal at power plants located outside California. For power contracts already in force, that ban would be effective once those contracts expired.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
