Panda Power Funds Finances One of the Largest Coal-to-Natural Gas Power Conversion Projects in the United States
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Retired Sunbury coal-fired power plant to be replaced in one of the
largest coal-to-natural gas power conversion projects in the United
States
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Bechtel and Siemens Energy to build 1,124 MW combined-cycle,
gas-fueled power plant
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Goldman Sachs, ICBC and Investec arranged debt financing totaling
$710 million; Siemens Financial Services to invest $125 million in
equity
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Plant will be fueled with Marcellus Shale gas; power approximately
1 million homes
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.
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The 1,124 MW Panda Hummel Station Power Plant (Graphic: Business Wire)
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.
“The natural gas revolution has arrived in the heart of coal country,”
said Todd W. Carter, president and senior partner of Panda Power Funds.
“I’m proud Panda is leading the way toward clean natural gas-fueled
generation. We’re ready to take what we’ve learned in Pennsylvania and
apply it to other coal-fired projects across the nation.”
Job Creation and Economic Benefits
Panda’s Hummel generating station is expected to bring significant
benefits to the region during construction and the life of the facility.
Approximately 900 jobs will be created to construct the power plant over
a two-and-a-half-year period. The generating station will create
approximately 35 direct, long-term jobs to run the facility and an
estimated 52 indirect jobs within the community to support the plant.
By serving as the anchor tenant in the 192-acre Sunbury Keystone
Opportunity Expansion Zone (KOEZ), Hummel Station should also support
additional investment at the site of the retired coal plant. The power
facility will also help support a long-term market for Pennsylvania
Marcellus Shale gas producers and royalty owners.
Environmental Benefits
The state-of-the-art 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 percent more power than the coal plant
it replaces, SO2 and NOX emissions will be reduced
by more than 90 percent. The Panda Hummel generating station will also
help preserve Pennsylvania’s fresh water resources by using 97 percent
less water for cooling purposes than the retired coal-fired Sunbury
plant.
Construction
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.
About Panda Power Funds, LP
Founded in 2010, Panda Power Funds is a private equity firm
headquartered in Dallas, Texas, which has the ability to develop,
acquire, construct, finance and operate large-scale, natural gas-fueled
power generation facilities. Panda has three combined-cycle power plants
in operation in Temple and Sherman, Texas, and four combined-cycle power
plants currently under construction in Pennsylvania and Virginia with a
combined capacity of more than 5,800 megawatts. Panda Power Funds also
has a 990 megawatt power project in Southern Maryland in advanced
development. The fund built a 20 megawatt solar farm in southwest New
Jersey that is one of the largest solar facilities in the Northeast
United States. Additional information on Panda Power Funds can be found
at www.pandafunds.com.
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