Private equity firm Panda Power Funds has received $835 million in debt and equity to finance one of the largest coal-to-natural gas conversions in the US, replacing a 65-year old Pennsylvania coal plant with a natural gas facility generating over 1,000MW.
Goldman Sachs, ICBC and Investec were joint lead arrangers for the project and committed $710 million of senior debt financing through two term loans. Siemens Financial Services invested $125 million in equity and will manufacture the plant’s equipment while Bechtel, a civil engineering company, will install and construct the power plant.
This is Panda’s seventh large-scale power facility financing in three-and-a-half years, totalling $6 billion in capital. The firm is also constructing two 829MW natural gas plants in Pennsylvania.
The plant on the Susquehanna River was known as the Sunbury and burnt coal to produce 400MW of electricity. The renovated facility will now be known as Hummel Station and will produce 1,124MW, 180 percent more than its coal-burning predecessor and enough to power around 1 million homes when it is operational in 2018.
Panda’s project will benefit from existing infrastructure, the nearby Marcellus shale play and a large commercial market its power will serve. It will also have access to a new $160 million pipeline to connect with the Marc I, Regency and Transcontinental regional gas pipelines.
Outside of Pennsylvania, Panda has recently raised $571 million of debt for a Virginia natural gas plant producing 778MW. Siemens helped fund that project as well, contributing $75 million of equity.
This story originally appeared in Low Carbon Energy Investor.