Arclight to fund NuCoastal's Texas power projects
HOUSTON (Reuters) - An affiliate fund of ArcLight Capital Partners has made an investment in Houston-based NuCoastal Power Holdindgs to allow the company to complete five new power plants in South Texas, the companies said on Wednesday.
NuCoastal Power, formed in 2005 by Texas oilman Oscar S. Wyatt Jr., will be renamed ReNu Power LLC.
The exact amount of ArcLight's initial investment was not disclosed, but was described as "sufficient" to fund NuCoastal's plan to redevelop 1,500 megawatts of natural gas and solid-fuel generation at five old sites in the Electric Reliability Council of Texas (ERCOT).
"ArcLight is excited about the opportunity to develop and construct a sizable portfolio in the ERCOT market," said Dan Revers, managing partner of the Boston-based energy investment firm which manages $6.8 billion.
NuCoastal's first project, the 300-MW Victoria County Power Station became operational this summer, officials said earlier.
The project, built on the site of an outdated gas plant once operated by a unit of American Electric Power Co (AEP.N), converted the retired gas plant into a combined-cycle operation by adding a gas turbine and heat-recovery steam generation equipment.
The Victoria plant has a six-year tolling agreement, the company said.
New generation is needed to help bolster ERCOT's summer capacity margin which has been falling for several years as aging gas plants became too expensive to operate with rising fuel prices. As much as 12,000 MW of new gas-fired generation has been proposed, but many developers have yet to proceed.
NuCoastal's other brownfield projects include the retired Lon C. Hill power plant near Corpus Christi which is expected to have 300 MW online next summer.
NuCoastal also is working to repower the J.L. Bates power plant site near McAllen and the La Palma power plant near Harlingen with new gas-fired generation, by 2010 and 2011, respectively.
An air permit has been issued to repower the E.S. Joslin site near Port Lavaca to be fueled by petroleum coke, a refinery byproduct, by late 2012. Fabrication on a new circulating fluidized bed combustion boiler and detailed engineering work has begun, NuCoastal said.
"We are extremely bullish on the market dynamics of the southern zone ERCOT market," said Roy Hart, NuCoastal chief executive officer.
Last year, NuCoastal reached an agreement with Texas environmental groups to offset all carbon dioxide and mercury emissions from the new Joslin plant.
In its latest report, ERCOT said it was tracking 243 grid connection requests with the potential of adding 104,000 MW. Gas-fired plants account for nearly 30,000 MW, second to wind generation at nearly 52,000 MW.
NuCoastal's founder, Wyatt, is expected to be released from federal prison in mid-November after pleading guilty to conspiracy in the U.N. oil-for-food scandal in 2007.
(Reporting by Eileen O'Grady; Editing by John Picinich)
