The emergence of power markets and power marketers is opening up new possibilities for creative financing of upgrade projects. At the appropriately named Bonanza plant in Utah a six-week upgrade outage next spring will add 32 MWe of capacity to the 420 MWe unit 1. But it will cost the owner, Deseret Generation & Transmission Co-operative (DG&T), absolutely nothing up front. Instead the upgrade work will be paid for jointly by Siemens Westinghouse Power Corp, who will do the upgrade job, and wholesale power marketer Constellation Power Source Inc (CPS) who will sell the extra power under a five year power purchase agreement. After five years the 32 MWe will revert to DG&T who will end up with a modernized 452 MWe plant, which is expected to be one of the lowest cost coal-fired units in the USA.
The upgrade will include: installation of a new high efficiency combined HP/IP turbine and a new ruggedized LP turbine; fitting of new generator hydrogen coolers to maintain generator reliability at higher load; and installation of a GenAid generator remote monitoring system.
This innovative deal is one of the first of its kind in the fossil power sector, but is unlikely to be the last. It is an approach that is possible in any country which has power trading arrangements and where there are 3rd party power marketing entities capable of taking on the power purchase agreement and financing the deal. Following Bonanza, a number of other similar opportunities are under discussion, both in the USA and Europe.