Southern Power has agreed to offload the Mankato Energy Center, a natural gas power plant with a capacity of nearly 760MW in Minnesota, to Xcel Energy for $650m.


Image: Xcel Energy to acquire Mankato Energy Center from Southern Power. Photo: courtesy of dlritter/

The Mankato Energy Center, located in Mankato, comprises a 375MW combined-cycle generation facility. It will see the addition of a second unit of around 385MW, which is currently under construction.

Southern Power, a subsidiary of Southern Company, expects the proceeds from the sale of the natural gas power plant to consolidate the balance sheet of the group.

The sale comes about two years after the power plant was acquired by Southern Power from Calpine, the original developer of the facility.

Southern Power president and CEO Mark Lantrip said: “The Mankato Energy Center is a valuable part of the local community and the regional energy infrastructure.

“This transaction is a great opportunity to deliver value for the benefit of Southern Company shareholders.”

Currently, the Mankato Energy Center has been providing power to Xcel Energy since 2016 under a power purchase contract. The company also inked an agreement to buy the power generated from the under-construction second unit commencing in 2019.

Xcel Energy has been planning to retire various power plants and has various contract expirations coming up in the mid-2020s. In this connection, the acquisition of the Mankato power plant will offer certainty that energy from the newer generating units will be available over its lifetime compared to just buying the output.

Xcel Energy Minnesota, South Dakota, North Dakota president Chris Clark said: “Securing the Mankato gas plant is a great value for our customers as it will provide significant cost savings and operating flexibility for the long term.

“As we continue to transition to cleaner energy sources and reduce reliance on coal, this plant will help us continue to deliver reliable electricity while keeping bills low.”

The sale of the Mankato Energy Center by Southern Power is expected to be completed by mid-2019, based on regulatory approval and meeting of other closing conditions.

In May, Southern Power signed a deal to divest 33% stake in its solar portfolio to Global Atlantic Financial Group for $1.175bn. The solar portfolio included in the deal comprises 26 operating solar facilities with a combined generation capacity of nearly 1.7GW.