Mammoth Dutch power station up for sale

Rijnmond Energie, an 810MW gas-fired plant previously owned by US-based utility InterGen, is to be put on the block after being seized by lenders.

A process to sell the Rijnmond Energie Facility, an 810-megawatt (MW) combined cycle gas turbine power plant located in Rotterdam, was initiated last week by a security agent acting on behalf of creditors.

The plant comprises two natural gas-fired Siemens turbines with about 70,000 operating hours per unit, two heat recovery steam generators and one Alstom steam turbine in a configuration operating at 50 percent efficiency. Having started operations in December 2004, it has since been mothballed amid tough pricing conditions for gas-fired plants in the Netherlands.

The sale, to be held as a public auction on 9 October, comes after the repossession of the plant by lenders from Rijnmond Energie CV (RECV), its previous owners. “Following events of default under RECV’s credit facility, the lenders enforced their security rights over the secured assets and the Security Agent has been instructed to sell the plant assets,” a spokesperson for restructuring firm Talbot Hughes McKillop (THM), which has been mandated to market the plant, told Infrastructure Investor.

US rating agency Moody’s downgraded InterGen’s senior secured debt in 2013, citing worries over the company’s exposure to weak merchant power markets in countries including the UK and the Netherlands. These would continue to impact cash flow and result in narrow debt service coverage margins over the following 12 to 24 months, the agency assessed.

A credit opinion published by the agency at the end of July reiterated the same concerns, stating that they would continue to weigh on InterGen’s liquidity “over the next several years”.

Rijnmond Energie has a nominal 25-year service life and a minimum operating life of 200,000 hours. The plant is currently uncontracted, which THM says would give a potential buyer “complete commercial optionality” to engage in whatever forward power arrangements it likes.

Asked whether the timing was right for such a transaction to take place, amid difficulties for conventional power producers across European markets, the firm said it expected strong interest from both trade and financial bidders.

“The growth in intermittent renewable generation is likely to increase supply side volatility, potentially giving rise to higher day ahead and intraday power prices. Gas plants are ideally suited to capitalise on this value given their relative flexibility compared to other generation types, particularly coal.”

Other structural changes, such the retirement of old thermal plant in the Netherlands, a reform of the European Union’s Emissions Trading System to increase carbon prices, the decommissioning of nuclear plants in Germany and Belgium and the eventual retirement of lignite plants in Germany, would create further tailwinds for efficient gas-fired power plants, a spokesperson for the THM added.

An acquisition could also be of interest to buyers willing to dismantle, relocate and recommission the plant in an alternative country or region, the firm said.