Eager to acquire Calpine’s South Point Energy Center (530 MW) in Arizona, NV Energy has disclosed the $75.6 million purchase price and its $21 million investment budget for the combined-cycle gas power plant in a filing to the Nevada Public Utilities Commission.
Filing a more than 1,000-page report to state regulators, Nevada’s incumbent utility seeks to prove that buying Capline’s 530 MW gas power peaker plant would help provide NV Energy with vital flexible capacity as a coal-fired plant is set to be retired.
In the filing, NV Energy argues that the peaker plant would require significant investment and that Calpine had been "unable to operate it profitably" in the face low energy prices. Purchasing an existing CCGT would be “more reliable”, NV Energy says than building its own gas-fired peaker plant. It is also a swifter solution at a supposedly much lower cost.
CCGT vs solar PV competition heats up
Natural gas prices are expected to remain low throughout the United States, NV Energy note. It also alluded to rising competition between gas power and renewables as the price of large-scale solar has decreased significantly. “As a result, short-run wholesale electric prices are projected to remain low,” it forecast, pointing out challenging conditions to reap profits from operating gas power peaking plants.
In the regulatory filing, Nevada’s main utility also projected a small rise in funding for energy efficiency programmes, and sought additional funding for a $33 million power transmission line.
Calpine and NV Energy already agreed a deal on April 1, however, the purchase of the South Point Energy Center requires regulatory approval. Pending consent, the two utilities will finalise the sale before the end of this year.