US based electricity generator Calpine has signed an agreement to divest the Mankato Energy Center located in Minnesota, US, to Southern Company subsidiary Southern Power for $395.5m.
The 375MW natural gas-fired, combined-cycle power plant features two natural gas units. An expansion project is also under development to add 345MW capacity to the existing facility.
As part of the expansion plan, a natural gas-fired combustion turbine and a heat recovery steam generator are planned to be installed.
The incremental steam is expected increase the power production of the plant’s existing steam turbine, thus improving the overall efficiency of the facility.
Upon completion scheduled by June 2019, the Mankato Energy Center will have 720MW of generating capacity.
Calpine president and CEO Thad Hill said: “Mankato is a modern, efficient and well-performing plant under long-term contract to the local utility and with an expansion in advanced development.
“This sale is another step in our capital allocation plan to divest plants in non-core regions when we see an attractive value opportunity.”
Proceeds from the sale will be used by Calpine to reduce debt and invest for other corporate purposes.
Scheduled to be completed in the fourth quarter of 2016, the deal is subject to antitrust review under the Hart-Scott-Rodino Act and approval from the Federal Energy Regulation Commission.
Southern Power president and CEO Buzz Miller said: "Southern Power remains committed to the strategic development of a diverse generation mix, and the Mankato Energy Center is an excellent fit for Southern Power's business model.”
Power generated from Mankato I power plant will be sold to Xcel Energy subsidiary Northern States Power until July 2026.
The 345MW expansion project will serve a 20-year agreement with Northern States Power.
Image: The Mankato Energy Center located in Minnesota, US. Photo: courtesy of Southern Company.