Financing seen as a breakthrough for U.S. bank market----- Plant to come online in late 2014 when ERCOT has projected a need for reserve power----- One of the nation's first "quick start" plants will help support intermittent renewable generation----- Will contribute up to $1.6 billion in economic development and create 700-800 construction jobs----- Bechtel and Siemens turn-key construction consortium to build plant
DALLAS — September 6, 2012 — Panda Power Funds was joined today by officials from across the state to break ground on the company's 758-megawatt natural gas-fueled, combined-cycle power plant in Temple, Texas. When complete, the facility will provide much needed electricity for approximately 750,000 homes in the Central Texas area.
"The Panda Temple Generating Station is one of the largest industrial projects announced in Texas this year" said Todd Carter, president of Panda Power Funds. "Today, we break ground for Texas — to provide our state with the power it needs for future growth and economic vitality; for our Panda team — who never gave up in spite of the national recession and its many setbacks; and for our investors — who have made this day possible."
Plant Seen as Important Step Forward
The financing of the Panda Temple plant is seen as a breakthrough for U.S. banks which have tried to establish a market for greenfield development projects in the United States. European banks have traditionally played a strong role in U.S. project-finance lending but have backed away from the market due to financial stress in the European Union. The Panda project represents the first time in six years that institutional investors have financed a capital intensive construction project in the United States with a term loan. Morgan Stanley and Ares Capital arranged the senior debt financing for the Temple plant.
The Temple plant is also seen as an important step forward for the State of Texas which is in need of additional power. During the summer of 2011, the state endured record heat, forcing the Electric Reliability Council of Texas (ERCOT), the state's grid operator, to declare six power emergencies. ERCOT's latest forecast shows reserves declining to 9.8% in 2014 and 6.9% in 2015 — below the 13.75% reserve requirement necessary for grid reliability. The plant is scheduled to enter commercial operation by the end of 2014.
Uniquely Designed for the ERCOT Market
In addition, the state is in need of generation that can quickly ramp up to meet power demand. Texas currently leads the country in wind power generation with more than 22% of the nation's installed capacity. According to state records, wind's share of electric generation in the region vaulted from 2.9% in 2007 to 10.2% during the first six months of 2012. As a result, Texas' electrical grid has been subject to increased volatility in recent years as wind power can suddenly drop offline when the wind stops blowing. A natural gas power plant must then step in to quickly make up for the lost power.
To meet this need, Panda designed the Temple generating station as a quick-start power plant. Power generation is expected to commence within 10 minutes of startup, reaching full gas turbine power production within approximately 30 minutes.
By closing the generating gap caused by intermittent renewable energy, the Panda Temple plant is able to help support both the integrity of the state's electric grid and the development of additional renewable generation in Texas. The quick-start gas turbines will reduce total startup emissions as well.
Accordingly, the state-of-the-art Panda Temple plant will utilize the latest, most advanced emissions-control technology, making it one of the cleanest, most efficient natural gas-fueled power plants in the nation. Carbon Monoxide (CO) emissions will be controlled to less than 10 parts-per-million, and Nitrogen Oxide (NOx) emissions to less than 2.0 ppm — among the lowest of any natural gas power plant in the United States.
Additionally, the plant has been designed with gas turbines which operate at a higher power output during high temperature conditions. This capability is ideal for the ERCOT market as Texas' recent hot summers have put an increased strain on the state's power grid, which is already stressed with the fastest growing population in the country.
"Our growing state needs the power that will be provided by this plant," said U.S. Representative John Carter, representing the 31st district of Texas. "Future industries looking to relocate to Texas need to know they will have a reliable supply of clean electricity to power their factories and places of business. Using abundant, 100% Texas-produced, natural gas to power this plant will also help support the security of the United States at a time when our nation is too dependent on foreign sources of energy."
The Panda Temple generation facility will be built by a turn-key construction consortium of Bechtel and Siemens Energy Inc. Bechtel is the largest construction and engineering company in the United States and one of the largest in the world. Siemens is one of the world's largest suppliers of turbine technology. As a part of the construction contract, Siemens will provide the power island package including the natural gas turbines, steam turbine and waste heat recovery boilers. Bechtel will be responsible for the engineering and procurement for the balance of the plant, and the installation, construction and commissioning of the facility.
Significant Economic Impact
According to an economic analysis conducted by Impact Data Source of Austin, Texas, the plant is expected to contribute up to $1.6 billion into the area's economy during construction and the plant's first 10 years of operation. An estimated 700-800 personnel will be employed to construct the plant at peak construction. During operations, the generating station will create an estimated 25 skilled jobs to operate the facility and 45 indirect jobs within the community to support the plant.
The plant will be located at the Synergy Industrial Park in South Temple. The turbines and generators will be manufactured at Siemens' factory in Charlotte, North Carolina.
About Panda Power Funds, LP
Founded in 2010, Panda Power Funds is a private equity firm located in Dallas, Texas, which has the ability to internally source and develop, acquire, invest in, and operate large-scale, natural gas-fueled power generation facilities. The company recently built a utility-scale, 20-megawatt solar farm in Pilesgrove, New Jersey — one of the largest solar farms in the northeast United States. Additional information on Panda Power Funds can be found at www.pandafunds.com.
Temple, Texas is a community with a diverse economic base that includes healthcare, warehouse distribution and manufacturing as its foundation. Within 200 miles of a population of 19 million, Temple is in a strategic location that is central within the Southwest U.S. marketplace. Visit www.choosetemple.com.
Bechtel is among the most respected engineering, project management, and construction companies in the world. We stand apart for our ability to get the job done right—no matter how big, how complex or how remote. Bechtel operates through five global business units that specialize in civil infrastructure; power generation, communications and transmission; mining and metals; oil, gas and chemicals; and government services.
Since its founding in 1898, Bechtel has worked on more than 22,000 projects in 140 countries on all seven continents. Today, our 53,000 employees team with customers, partners and suppliers on diverse projects in nearly 50 countries. www.bechtel.com.
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About The Siemens Energy Sector
The Siemens Energy Sector is the world's leading supplier of a complete spectrum of products, services and solutions for power generation in thermal power plants and using renewables, power transmission in grids and for the extraction, processing and transport of oil and gas. In fiscal 2011 (ended September 30), the Energy Sector had revenues of EUR24.9 billion and received new orders totaling approximately EUR31.8 billion and posted a profit of EUR3.9 billion. On October 1, 2011, the Energy Sector had a work force of more than 82,000. Further information is available at: www.siemens.com/energy.