NRG to Build 500 Megawatts of Gas-Fired Generation in California

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey) earlier this summer received the green light from California utility regulators to construct a 500-megawatt (MW), five-unit, simple-cycle, gas-fired power plant in southern California. The new generation will ensure electric reliability in Southern California following the closure in 2014 of the San Onofre Nuclear Generating Station (SONGS) and the impending retirement of the Encina Power Station, a victim of California's ban on once-through-cooling systems. Encina, located in Carlsbad, California, is owned by NRG.

The closure of SONGS removed more than 2,150 MW of baseload power from the state's power market. For more on the closure of SONGS, see March 24, 2014, article - California Turns to Natural Gas, Renewables to Replace Energy Lost from SONGS Closure. California's ban on once-through cooling systems affects 18 thermal generators across the state, according to California's State Water Resource Control Board (Sacramento, California).

NRG's new generation, named the Carlsbad Energy Center, will cost an estimated $600 million to build. It will consist of five 100-MW generators. Burns & McDonnell Incorporated (Kansas City, Missouri) is providing engineering services for the project, and ARB Incorporated (Lake Forest, California) is providing turnkey services. Construction is scheduled to kick off this November, and the plant is scheduled to begin operating by November 2017.

The Carlsbad Energy Center will use five General Electric (NYSE:GE) LMS100 Combustion Turbines. San Diego Gas & Electric (SDG&E) (San Diego, California), a unit of Sempra Energy (NYSE:SRE) (San Diego, California), has signed a contract with NRG for all of the electricity produced by the Carlsbad Energy Center. The California Public Utilities Commission (CPUC) (San Francisco, California) approved that contract May 21.

Encina, a 969-MW, gas-fired generator dating from the 1950s, is scheduled to be retired in late 2017, the same time the Carlsbad Energy Center is scheduled to be operating. California passed a law mandating the closure by yearend 2017 of thermal power plants that used once-through cooling.

"We appreciate the CPUC's vote of confidence that the Carlsbad Energy Center is the best approach to have the appropriate, flexible capacity online by 2017 to enable California to reach its greenhouse gas reduction goals through building additional renewable generation, while preserving the reliability of the grid," said John Chillemi, president of NRG Energy's West region, in a statement. "We appreciate the recognition by CAISO [the California Independent System Operator] of the project's contribution to the grid and SDG&E's continued support of the project and the benefits it will bring to all of southern California."

"The generating portfolio in California continues to get greenier and gassier," said Brock Ramey, Industrial Info's North American power specialist. "We are tracking 33 active gas-fired Power Industry capital projects under development in the state, valued at about $10 billion. In addition, developers have proposed building 64 solar projects valued at about $21.75 billion in California. We don't expect all of those projects to kick off as scheduled, but the state is certainly playing an active role in reshaping the state's generation portfolio."

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