Texas Leads the Nation in Gas-Fired Power Development

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Everything's bigger in Texas, including the pipeline of gas-fired power projects under development. Industrial Info is tracking 55 active gas-fired power plants in Texas worth about $26.2 billion, making the state the largest U.S. market for development of gas-fired power generation.

Some of these projects are being developed to meet new electric demand growth. Others will replace generation that are scheduled to be closed due to tougher environmental regulations. Still others will be used to back up renewable generation in the state. For more on gas-powered backup generations, see November 13, 2015, article Natural Gas Peaking Units Address Limitations of Renewable Power in Texas.

Most of these proposed gas-fired generators will burn natural gas extracted from Texas' plentiful gas reserves, including the Barnett and Eagle Ford shales and the Permian Basin. Industrial Info does not expect all of these projects to kick off construction according to their original schedules.

The units under development include simple-cycle and combined-cycle generators. The project types include grassroot, brownfield and unit additions. Several projects already are under construction. Approximately $3.2 billion of these gas-fired power projects are scheduled to begin construction this year. In 2016, about $7.5 billion of projects are scheduled to begin turning dirt. And in 2017, developers plan to begin work on another $7.4 billion of Texas gas-fired generation projects. Another $8 billion of projects are scheduled to kick off in 2018 and beyond.

Click the image at right to see the total investment value (TIV) of gas-fired power plants in Texas, by kickoff year.

Texas Zone 7, southeast of Houston, has garnered the largest slice of active projects, totaling about $6.8 billion, followed by Texas Zone 12, near Dallas, with about $3.6 billion. Texas Zone 3, also near Dallas, has about $2.7 billion of active projects.

Click on the image at right to view the Texas market zones with the largest dollar value of gas-fired power plants under development.

Some of the largest gas-fired power projects under development in Texas include:

• Shawnee Energy Center, a four-unit, 920-megawatt (MW), $950 million, simple-cycle, grassroot project being developed in Hill County (Zone 3) by Shawnee Energy Center LLC (Austin, Texas). The project is scheduled to kick off construction in early 2017 and to be operating by mid-2019. The owner plans to release a request for proposals (RFP) for an engineering, procurement and construction (EPC) firm in mid-2016. Click here to view a report for this project.
• Ganado Generating Station, a five-unit, $850 million, grassroot simple-cycle project being developed in Jackson County (Zone 5). This 920-MW project, scheduled to begin construction in mid-2017 and to be brought online in mid-2019, is being developed by Southern Power Company (Atlanta, Georgia), a unit of Southern Company (NYSE:SO) (Atlanta). The owner plans to release a RFP for an EPC firm in early 2016. Click here to view a report for this project.
• Cedar Bayou Power Station, an 836-MW, combined-cycle, unit addition being developed in Harris County (Zone 7). This $836 million project, being developed by a unit of NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), is scheduled to begin construction in late 2017, and to be generating electricity by late 2020. The owner plans to release a RFP for an EPC firm in late 2016. Click here to view a report for this project.
• Sam Bertron Power Station, another plant under development by a unit of NRG Energy, is scheduled to break ground in mid-2017 and be online by mid-2020. The 836-MW, $836 million unit addition also is located in Harris County (Zone 7). The owner plans to release a RFP for an EPC firm in early 2016. Click here to view a report for this project.
• Lon C Hill Power Station, a 740-MW, $800 million brownfield generation project scheduled to be built in Nueces County (Zone 5). This project, scheduled to begin turning dirt in late 2017 and be operating by late 2019, is being developed by Consolidated Asset Management Services (Victoria, Texas). The owner plans to release a request for proposals (RFP) for an EPC firm in late 2016.

"Texas has a full pipeline of gas plants under development, but we don't expect all of these projects to begin construction according to their original schedules," said Britt Burt, Industrial Info's vice president of global research for the Power Industry. "However, gas-fired projects tend to have a relatively low fall-out rate compared to other types of generation. That means we expect most of these proposed projects eventually will get built, though some may be deferred for a while. Texas produces more natural gas than any other state, so it should be no surprise that developers are flocking to the Lone Star State to build their gas-fired generation projects."

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.