Dive Brief:

• A unit of Southern Co. has signed a memorandum of understanding with Wartsila of Finland to develop two flexible gas-fired power plant projects that could be as large as 450 MW each.

• Southern Power, Southern Co.’s independent power arm, will lead the development efforts, looking for projects with long-term offtake contracts with creditworthy counterparties.

• The move is in line with Southern's business strategy of building generation assets that are substantially covered by lengthy power purchase contracts, a shield against volatility low power prices in the nation's merchant power markets.  

Dive Insight:

The generation market is adapting in response to demand for more flexible resources that can ramp up and down quickly to accommodate intermittent output from renewable energy sources.

California is trying to come up with ways to compensate flexible capacity, for instance, and manufacturers like Wartsila are responding. The company recently added energy storage to its portfolio of generating plants.

Wartsila’s new deal with Southern aims to give the Finnish company a bigger foothold in the U.S. market.

“In the USA we are seeing a large demand for flexible generation, and Wartsila provides the most efficient and fastest starting solution making this the ideal investment for customers to serve the need for flexibility,” Javier Cavada, president of Wartsila Energy Solutions, said in a statement.

For Southern, the deal gives it an experienced development partner to expand its 12.6 GW generation portfolio. The company currently owns 10 gas plants amounting to more than 9,000 MW, as well as about 3,000 MW of renewable assets. 

“This agreement is an early stage in a lengthy process, but we believe this technology could be an excellent solution for our customers, and for many others in the marketplace that we hope to serve through this relationship,” Buzz miller, Southern Power president and COE, said in a statement.