UPDATE 1-NRG, Calpine adding natgas-fired plants in California

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
    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.