Who owns the plant that makes the steam? Investors have started to care a great deal. On 3 November Energy Capital Partners (ECP), a New Jersey energy investor, announced that it has completed the purchase of three gas-fired cogeneration plants in Texas and Illinois from the Toronto-based manager Fengate Asset Management. Together they come to 892 MW.
What Is In The Portfolio
According to ROI-NJ, which reported the announcement, the plants supply process steam and electricity to two integrated petrochemical complexes in the United States. The customers are not named. The portfolio has long-term contracts, though the terms and the price were not disclosed, and it sells into the ERCOT and PJM power markets. Fengate had owned the plants for more than six years and built the portfolio together with the developer Ironclad Energy.
Why A Buyer Wants Them Now
ECP says it has owned and operated more than 9 GW of cogeneration assets before, through companies such as Calpine, Atlantica, Heartland and Triton, and it plans to add more industrial gas-fired generation through its newest flagship fund. In the announcement, an ECP partner links the deal to rising power demand, tight reserve margins and the strain that new gas plant construction has put on supply chains, which has pushed up replacement costs and power prices. In plain words: an existing plant with a steam customer attached is worth more when a new one takes years to deliver.
What Changes For The Plant Floor
A cogeneration plant sold to a new owner keeps the same machines and the same steam contract, but the maintenance and upgrade budgets may change. Owners who hold such assets for the long run tend to look harder at availability, heat rejection in hot weather and spare capacity, since a lost hour hurts both the power sale and the steam customer. The market side of cogeneration is covered on our applications page.
Sources: ROI-NJ
