Calpine to Buy Guadalupe Power Plant - Analyst Blog

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Electric utility Calpine Corporation ( CPN ) has plans to acquire a combined-cycle power plant from MinnTex Power Holdings, LLC for $625 million. The company expects to close the deal with MinnTex Power Holdings, a private equity-backed power company, in the first quarter.

Located in Guadalupe County, near San Antonio, Texas, this natural gas-fired plant has a generating capacity of 1,050 megawatt (MW). On a 110-acre site, this Guadalupe plant includes two 525 MW generation blocks, each having two GE 7FA combustion turbines, two heat recovery steam generators and one GE steam turbine. If market conditions permit, this transaction also includes the rights to an advanced development opportunity for an approximately 400 MW quick-start, natural gas-fired peaker.

With this acquisition, Calpine will be able to expand its generation capacity in Texas where demand for electricity is continuously rising. State regulatory authorities have also taken a number of steps to push the development of new power plants. However, a state legislator warned the Texas Public Utility Commission to slow down on proposed market changes.

Regulators also stated that although the state requires more peaking units which can be set up speedily, the units need to operate only at times of rising power demand in order to compensate for falling wind generation. In this scenario, Calpine as well as other power plant owners expressed their unwillingness for the proposal as they believe that the economics of the existing Texas market does not justify new construction under such clauses.

Calpine's latest deal to buy the Guadalupe power plant follows a $432 million plant acquisition in Central Texas last year and two expansions in the Houston area that will add about 520 MW to its power capacity in the state next year.

Calpine Corp. generates more electricity than any other independent power producer in America, with a fleet of 93 power plants in operation or under construction, representing more than 28,000 MW of generation capacity.

Currently, the company is in the midst of several vital projects, including a combined-cycle project in Delaware, a fossil fuel steam-based power plant called Deepwater Energy Center, and expansion of the Mankato Power Plant and Los Esteros critical energy facility.

Calpine Corp. currently has a Zacks Rank #3 (Hold). However, better placed stocks in the space that are worth considering include Zacks Ranked #2 (Buy) Brookfield Infrastructure Partners L.P. ( BIP ), Alliant Energy Corporation ( LNT ) and Exelon Corp. ( EXC ).

BROOKFIELD INFR (BIP): Free Stock Analysis Report

CALPINE CORP (CPN): Free Stock Analysis Report

EXELON CORP (EXC): Free Stock Analysis Report

ALLIANT ENGY CP (LNT): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: BIP , CPN , EXC , LNT

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