Panda Power finances conversion of retired coal plant to natural gas; one of largest power conversion projects in US
Panda Power Funds has financed the 1,124 megawatt Panda “Hummel Station” power plant—one of the largest coal-to-natural gas power conversion projects in the United States. The plant will be located at the site of the retired Sunbury coal-fired power plant near Shamokin Dam in Snyder County, Pennsylvania. The 400 MW, 65-year old plant was shuttered in 2014 in response to low natural gas prices and the onset of strict environmental regulations promulgated by the Obama Administration.
The Hummel Station generating facility will utilize the latest, most advanced emissions-control technology, making it one of the cleanest natural gas-fueled power plants in the nation. While the new power station will supply 180% more power than the coal plant it replaces, SO2 and NOx emissions will be reduced by more than 90%. The Panda Hummel generating station will also help preserve Pennsylvania’s fresh water resources by using 97% less water for cooling purposes than the retired coal-fired Sunbury plant.
The Panda Hummel generating station will be fueled with Marcellus Shale gas, which is expected to provide the project with a significant operating cost advantage. The plant is expected to supply large power markets, including Philadelphia and the New York metropolitan area, when it enters commercial operations in the first quarter of 2018.
Goldman Sachs, ICBC and Investec acted as joint lead arrangers for the senior debt financing of the plant, raising Term Loan A and Term Loan B debt capital totaling $710 million. The Term Loan B debt received an initial credit rating of BB- and a “1” recovery rating by Standard & Poor’s. The Panda Hummel transaction marks the seventh financing of a new, large-scale power facility by Panda Power Funds in three and a half years, representing approximately $6 billion in total combined capital. The Fund is supplying equity for the project along with large institutional co-investors including Siemens Financial Services which is investing $125 million in the Hummel Station plant.
Panda Power Funds selected a construction consortium of Siemens Energy Inc. and Bechtel Power Corp. to build the Hummel facility on a turn-key basis. Siemens will provide the power island package including the natural gas turbines, steam turbine, generators, heat recovery steam generators, and instrumentation and controls systems. The turbines for the Hummel generating station will be manufactured at Siemens’ manufacturing facility in Charlotte, North Carolina.
Bechtel will be responsible for the engineering and procurement for the balance of the plant, and the installation, construction and commissioning of the facility.
The Panda Hummel Station power plant will access natural gas through the MARC 1 and Transcontinental regional gas pipelines. Hummel Station will benefit from its close proximity to the Susquehanna-Roseland Electric Reliability Transmission Project, a recently completed 146 mile, 500 kV electric transmission line that was one of seven nationwide projects fast-tracked by the Obama Administration’s Rapid Response Team for Transmission.
The generating station will be located on the west bank of the Susquehanna River in Shamokin Dam Borough on the site of, and immediately adjacent to, the retired Sunbury coal plant. The Panda Hummel power plant will utilize existing infrastructure at the site for the electrical interconnection, water intake and storm water runoff systems. Construction will take approximately 30 months.
Panda Power Funds has two generating stations currently under construction in Bradford and Lycoming counties. The 829 megawatt “Liberty” power plant, located in Towanda, Pennsylvania, is expected to enter commercial operations in the first quarter of 2016. The 829 megawatt “Patriot” power plant, located near Williamsport, Pennsylvania, is expected to enter commercial operations in the second quarter of 2016. The Panda Liberty and Panda Patriot power plants were the first two power projects specifically developed to take advantage of their proximity to the Marcellus Shale gas formation.