May 2 (Reuters) - U.S. power companies NRG Energy Inc and Calpine Corp are adding new generation in California to help balance the state's growing reliance on renewable energy sources expected to come online in the next decade, the companies said on Thursday. NRG said its 720-megawatt (MW) Marsh Landing natural gas-fired peaking plant in Northern California entered service Wednesday, according to a release. Marsh Landing, which can supply power for up to 650,000 homes, is located near Antioch, California, about 45 miles (72 km) east-northeast of San Francisco. California power company PG&E Corp's Pacific Gas and Electric Co will buy the plant's output under a 10-year power purchase agreement. Separately, Calpine, the largest independent power producer in California, said its 429-MW Russell City Energy Center near Hayward, will be completed in the third quarter. Its output will also be sold to PG&E under a 10-year agreement, Calpine said in a release. Calpine's Los Esteros Critical Energy Facility near San Jose will also be completed in the third quarter, according to a release. The plant is being upgraded from a 188-MW, simple-cycle generation power plant into a 309-MW combined-cycle generation plant. The California power grid agency said 1,300 MW of new gas-fired generation came online in 2012 and it expects another 2,000 MW of new gas generation to come online this year, according to the annual market monitor report issued this week. As more wind and solar generation is added to meet the state's 33-percent renewable mandate by 2020, the grid agency is looking at the need for back-up gas generation to maintain grid reliability, according to the report. With the new Marsh Landing plant on line, NRG said it could immediately retire two less-efficient, 1960s-era units at its adjacent 672-MW Contra Costa power plant that relies on ocean water for cooling. California wants power companies to stop using ocean water in so-called "once through cooling systems" over the next several years in part to protect aquatic life. Once through cooling uses water in a single pass through the plant to remove heat from industrial equipment. The new units, which are air cooled, will add 50 MW of power capacity over the old Contra Costa units with less environmental impact and lower emissions, NRG said. In addition, the fast start technology will allow the new units to reach full capacity in minutes where it took the old Contra Costa units hours, NRG said.
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