CPS Vitality will purchase Talen Vitality’s 1.7-GW portfolio—comprising three pure gasoline–fired energy crops—within the Texas marketplace for $785 million.
The nation’s largest municipally owned energy entity on March 27 mentioned it reached an settlement with aggressive generator Talen Vitality for the acquisition. The transaction is predicted to shut within the second quarter of 2024, “topic to customary internet working capital changes at closing.”
The belongings embody Talen’s 897-MW Barney Davis and 635-MW Nueces Bay pure gas-fired technology services, each situated in Corpus Christi, Texas, in addition to its 178-MW pure gas-fired technology facility in Laredo, Texas. The three crops are situated within the South Zone of the Electrical Reliability Council of Texas (ERCOT).
A Substantial Technology Enhance for CPS
The transfer is notable for CPS Vitality, which has for a few years supplied aggressive charges and powerful reliability whereas avoiding price will increase by way of value administration and worth realized by way of gross sales of surplus energy into ERCOT. Final yr, nonetheless, the utility shifted to a extra “proactive” technique to bolster its fairness, operational effectivity, and vitality safety with its adoption of Imaginative and prescient 2027.
The plan responds to a mix of deferred expenditure and new funding wants to deal with reliability vulnerabilities revealed by Winter Storm Uri together with CPS’s decarbonization aims, which search carbon neutrality by 2050. Whereas the utility’s portfolio is at the moment 48% powered by pure gasoline, 17% by coal, 13% by nuclear, and 22% by renewables, it seeks to section out 1.3 GW of coal technology (from Spruce 1 and a pair of) by 2030. As well as, it plans to retire 1.7 GW of older pure gasoline steam models beginning in 2025. The utility additionally factors to hovering vitality demand, citing hotter climate as a contributor.
The acquisition of Talen’s 1.7-GW Texas portfolio “helps CPS Vitality’s technology plan, authorized in 2023 by its Board of Trustees. It secures a further 1,710 MW of energy for the better San Antonio neighborhood and shall be obtainable as quickly as this summer season,” the utility mentioned on Wednesday. “The addition of those models aligns with the technology plan, which incorporates the retirement of older models and the addition of a mix of gasoline, photo voltaic, wind, and vitality storage.”
The crops in Corpus Christi and Laredo are anticipated to be operational for the following 25 years. CPS additionally notes that it has added 730 MW of photo voltaic vitality and 50 MW of vitality storage to this point as a part of its technology plan. In September, it issued a request for proposals for a further 500 MW of vitality storage.
“With the addition of those services, environmental emissions will keep on monitor to satisfy the Metropolis of San Antonio’s Local weather Motion and Adaptation Plan emissions discount dedication by 2030. As well as, it gives CPS Vitality the pliability so as to add extra renewable vitality and storage with this good thing about firming capability (energy that’s obtainable as wanted) in place,” it mentioned.
Talen to Exit ERCOT
Talen, which just lately exited chapter, has sought to execute strategic transactions contemplated by its Chapter 11 plan of reorganization to considerably cut back its debt and strengthen its steadiness sheet. In 2023, it reported it “achieved its strongest monetary efficiency ever.”
Earlier in March, Talen offered its 960-MW Cumulus information middle campus, which was developed subsequent to its Susquehanna nuclear plant in Pennsylvania, to Amazon Net Companies (AWS) for gross proceeds of $650 million (internet proceeds are estimated to be roughly $361 million). “This transaction gives a lovely return on our funding and imaginative and prescient in constructing Cumulus and creates worth by way of the sale of unpolluted carbon-free energy from our top-decile Susquehanna nuclear plant,” Talen President and CEO Mac McFarland famous earlier this month.
With the sale of its Texas belongings, Talen will function primarily in PJM and the Western Electrical energy Coordinating Council, with a fleet principally situated within the Mid-Atlantic and Montana. In March, the corporate famous that its ERCOT fleet “ran properly throughout elevated intervals of peak demand [in 2023], particularly in the summertime, driving vital bodily vitality margin, although that was partly offset by outages and congestion prices.”
The transaction unveiled on Wednesday “demonstrates our continued dedication to unlocking vital worth for Talen, whereas additionally caring for our individuals,” McFarland mentioned. “We’re glad that these belongings will help CPS Vitality in its long-term technique to serve its rising neighborhood with dependable and cost-effective energy technology.”
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
