New Turbine Technology, Environmental Concerns Drive Development of Maryland NGCC

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Private-equity firm Panda Power Funds (Dallas, Texas) is developing an 859-megawatt (MW), natural gas, combined-cycle generator (NGCC) in Maryland that would use Siemens' new SGT-8000H-class turbine, which has achieved efficiencies of 60%. "It would not be the first deployment of the H-class turbine in the U.S., but it would be one of the first," Bill Pentak, Panda's vice president of investor relations and public affairs, told Industrial Info.

"Maryland imports an inordinate amount of electricity--about 40%--which creates congestion issues and supply problems," Pentak said. "Maryland needs more megawatts on the ground within the state."

Recently, a federal appeals court invalidated a state order supporting the construction of a 661-MW, gas-fired generator being developed by Competitive Power Ventures Holdings LLC (CPV) (Silver Spring, Maryland). That court decision and plans to close coal-fired generation in and around the PJM (Pennsylvania-New Jersey-Maryland) Interconnection is making a bad situation worse, Pentak added.

"Our business model for the Mattawoman Power Project is not predicated on invalidating the CPV contract or on coal plant retirements, but those developments enhance the market's need for additional generation," Pentak said in the interview. "The state needs both the CPV plant and Mattawoman."

To meet that need, Panda, the successor company to independent power developer Panda Energy International, wants to build an 859-MW NGCC about seven miles from the banks of the Potomac River in Brandywine, Maryland. The company has applied for the necessary permits and is hopeful they will be granted next year. If so, the plant could be operating by mid-2017, Pentak said. The project has a total investment value (TIV) of about $1.1 billion.

With a documented operating efficiency of 60% and a 6,400-British-thermal-unit heat rate, the Siemens H-class turbine generates significantly more electricity per unit of gas input than other turbines, Pentak said. "The H-class is amazing."

Another unusual feature of the Mattawoman plant is its use of treated wastewater, not potable water, for cooling. "We're diverting wastewater that would normally be going into the Potomac River, which is causing problems in Chesapeake Bay. Drinking water is precious, and preservation of the Chesapeake Bay is critical to local residents. Mattawoman will be a zero-liquid discharge (ZLD) generator that will help restore the Chesapeake and not consume local fresh water."

Panda is paying several million dollars more to operate the Mattawoman plant as a ZLD facility. Two other nearby generators under development by Panda also will be ZLD facilities. While those added costs will shave profit margins a bit, Pentak said Panda's environmental ethos made that decision a natural one.

"There's a reason why our corporate symbol, the giant panda bear, is also a worldwide symbol of environmental protection," he said. "Our founders believe strongly in operating in an environmentally responsible manner."

For more than a year, Pentak added, Panda has worked hard to reach out and engage with local stakeholder groups that are concerned about the environment. "If you're developing a power plant, community support is as important as gas, water and steel. We learned a long time ago that it's better to design a facility the public can support rather than try to cram it down their throat."

"We have worked really hard to have a good relationship with local civic and conservation groups," the Panda spokesman continued. "They tell us what's important to them, and we listen." But he added the company can't predict whether any of these groups will file a suit to block Mattawoman.

"We look forward to continuing our relationship with the local community and helping ensure that the Mattawoman generating station is a positive for everyone concerned," said Todd W. Carter, president and senior partner of Panda Power Funds, in a statement when the company announced plans to develop the generator.

For that reason, the proposed generator is sited in an existing heavy industrial zone, rather than a rural one, to preserve home values. To reduce sightlines, the facility has been designed with one of the lowest profiles of any power plant in the U.S.

Mattawoman will be 26 feet lower than a nearby weather radar. The plant will have a setback of approximately 565 yards from the nearest road, and it will be heavily buffered by trees and further shielded from view with berms and landscaping.

Panda would like to sign a power-purchase agreement, but until that happens the developer plans to use hedging instruments to guarantee a revenue floor for the project. "We're looking at a variety of instruments that function like an insurance policy in guaranteeing a revenue floor, while preserving financial upsides," Pentak said.

Panda Power Funds was launched in 2010 as the successor company to Panda Energy International, which had developed more than 9,000 MW of generation over a quarter-century, starting in 1982. In addition to Mattawoman, the private equity fund has developed three large gas-fired generators in Texas and one in Virginia. Earlier this year, it acquired a generator under development, the Moxie Liberty plant, and renamed it Panda Liberty. For more on the Panda Liberty plant, see September 6, 2013, article - Second Large NGCC Plant Wins Permits from Pennsylvania Regulators.

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