Dive Brief:
- Talen Energy, the new independent producer formed by spinning off PPL's generation assets and combining them with those belonging to Riverside Holdings, has announced a major generation buy totaling $1.175 billion for more than 2,500 MW of gas-fired capacity.
- Talen announced yesterday it was purchasing MACH Gen LLC in a deal expected to close by the end of the year.
- Talen Energy's total generating capacity will increase to 17,600 MW following the deal, though it must still sell about 1,300 MW to comply with federal regulators' approval of the company.
Dive Insight:
Talen Energy, barely into its second month as a new independent producer, yesterday said it would purchase three gas-fired facilities located in New York, Massachusetts and Arizona with a combined capacity of 2,532 MW.
The plants include:
- The Athens plant in New York, with a capacity of 1,080 MW and a heat rate of 7,100 BTU/WMh;
- The Millennium plant in Massachusetts, with a capacity of 360 MW and a heat rate of 6,975 BTU/MWh;
- And the Harquahala facility in Arizona, with a capacity of 1,092 MW and a heat rate of 7,100 BTU/Mwh.
"This negotiated deal represents a significant step in the execution of our growth strategy, and provides meaningful improvement in our cash flow profile," Talen Energy President and CEO Paul Farr said in a satement. "The transaction adds highly competitive combined cycle gas assets in NYISO and ISO-NE, two mature and liquid wholesale power markets, with the opportunity to create significant value by optimizing a very efficient gas-fired plant in Arizona."
Talen said it would finance the $1.175 billion deal with a combination of debt and cash, and that the he final plan will take into consideration market conditions and the amount of existing MACH Gen debt to be assumed, along with anticipated proceeds from FERC mitigation sales and other pending divestitures.
Most of Talen's generation is in the PJM and ERCOT markets; in order to get approval for the formation of the company, Talen agreed to divest from 1,300 MW in PJM.