Vistra to Acquire Dynegy, Become Top Power Industry Player in Texas with $1.4 Billion in Projects

Researched by Industrial Info Resources (Sugar Land, Texas)--Following months of speculation, Vistra Energy (NYSE:VST) (Irving, Texas) announced it will acquire Dynegy Incorporated (NYSE:DYN) (Houston, Texas) in a $1.75 billion deal and become one of the largest independent power producers (IPP) in the nation. It also will become the largest IPP in Texas, as Vistra already is the parent company of TXU Energy and Luminant. Industrial Info is tracking nearly $1.4 billion in active projects involving Vistra or Dynegy, covering coal, natural gas and renewable generation.

The company is projected to have a combined market capitalization in excess of $10 billion and a combined enterprise value greater than $20 billion, according to a Vistra press release. It will serve about 240,000 commercial and industrial customers, and 2.7 million residential customers in 12 states and the ERCOT, PJM, and ISO-NE markets.

The combined company will have more than 40 gigawatts of power production, about 60% of which will be from natural gas-fired plants, according to The Houston Chronicle. Both companies once saw coal-fired generation as their bread-and-butter, but have been striving to diversify in recent years, acquiring and developing natural gas-fired assets and, to a lesser extent, renewable assets.

Dynegy subsidiary Midlothian Energy LP has two major projects under construction at natural gas-fired power plants in Texas: $258 million in turbine upgrades at a merchant power plant in Midlothian and $172 million in turbine upgrades at Hays Energy Power Station in San Marcos. The project in Midlothian will upgrade six Alstom combustion turbines, while the San Marcos project will improve four Alstom single-shaft combustion turbines. For more information, see Industrial Info's project reports on the Midlothian and San Marcos upgrades.

Both Vistra and Dynegy have pared back their investments in coal-fired power in recent years as natural gas has rapidly emerged as a less expensive alternative for energy generation. Earlier this month, Luminant, a subsidiary of Vistra, said it will retire the Monticello, Sandow and Big Brown power plants in Texas, all of which are coal-fired. The plants have a combined nameplate capacity of 4,280 megawatts (MW). For more information, see October 9, 2017, article - Another One Bites The Dust: Luminant to Close Coal-Fired Power Plant in Texas; October 16, 2017, article - Luminant to Close Two More Texas Coal-fired Power Plants; and October 26, 2017, article - Coal Giant Peabody Tries to Take Luminant Power Plant Closure in Stride.

Luminant also is closing and performing reclamation at two coal mines in Texas: the Winfield mine near the Monticello plant in Mount Pleasant, and the Oak Hill mine near the Martin Lake plant in Henderson. In both cases, mobile mining equipment will be relocated to Luminant's other mining operations; unlike the Monticello plant, the Martin Lake plant remains open. For more information, see Industrial Info's project reports on the Winfield and Oak Hill mine closures.

In addition, Luminant has proposed adding two units to its natural gas-fired Permian Basin Power Station in Monahans, Texas. The project is in its earliest phases, where plenty of factors could alter or cancel it; as proposed, the sixth and seventh units at the facility each would have capacities of 231 MW. For more information, see Industrial Info's project report.

Vistra also has been building up its portfolio with solar projects. Currently, it is seeking permits for its proposed Morada del Sol PV Solar Farm in Midkiff, Texas. This project also is in its earliest phases, and it would not begin construction until mid-2018 at the earliest. For more information, see Industrial Info's project report.

Vistra also holds nuclear and wind-energy assets through Luminant.

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