The company seeking to build the controversial Keystone XL pipeline has turned to buying big natural gas power plants, as delays persist over approval of the embattled oil pipeline.
“This acquisition presents a unique opportunity in the current market environment and is a natural extension of our U.S. Northeast power business, strengthening our overall portfolio of assets in the region,” said TransCanada President and CEO Russ Girling about securing a deal with Talen Energy to buy a plant in gas-rich Pennsylvania.
The announcement came as the federal government reported in October that the majority of the nation’s electricity came from natural gas in 2014 and that a significant transition away from coal was underway. The transition is being driven by a revolution in gas production derived from shale rock formations deep underground by using the process known as fracking.
TransCanada, although most well-known for its oil and gas ventures, owns and operates fleets of power plants in the United States.
Gurling said the acquisition of the $654 million combined-cycle natural gas plant in Lebanon, Pa., adds nearly 800 megawatts of electricity to the company’s existing Northeast power plant fleet, which totals 4,500 megawatts.
The plant is in the heart of Marcellus shale country, which gives it ample access to fuel at the most competitive price, according to TransCanada.
“This relatively new and highly efficient gas-fired power plant provides us with a solid platform from which to continue to grow our already substantial wholesale, commercial and industrial customer base in this market area,” Gurling said.
The power plant also will earn money from participating the federally overseen markets that are part of the largest electricity market in the country, operated by PJM Interconnection.
The company hasn’t given up on the Keystone XL project to deliver oil from Alberta to refiners on the Gulf Coast. It is working for approval of the project at the state level, as the Obama administration has been studying it for seven years.
TransCanada is not the only company investing in U.S. natural gas-fired power plants.
Entergy is selling a $490 million natural gas plant in Delaware to Washington investment firm Carlyle Group. At the same time, the company announced Tuesday that it will close another one of its nuclear power plants in the Northeast, the Pilgrim plant in Plymouth, Mass. It shuttered a plant in Vermont last year.
The Nuclear Energy Institute said Tuesday that the plant’s closure will be a major loss to the region, which will not be easily replaced in terms of its power output and low emissions.
The Pilgrim plant is slated to close in 2019, and it looks like its power will be made up for by new and existing gas-fired plants. Calpine Energy, the largest natural gas power plant utility in the country, is buying up plants in the region to sell electricity into the region’s multi-state grid.
Calpine announced Tuesday that it bought a large, nearly 800 megawatt gas-fired plant in New Hampshire. It says the plant will boost its electricity fleet in the Northeast to 2,000 megawatts of “reliable and environmentally responsible generation resources.”
In Ohio, a Boston company announced last week it will begin construction of a second $1.1 billion power plant in the Utica shale region of the state.
