Patriot designed to monetize
Marcellus shale gas
The Panda Patriot power plant is now up and running. Like its sister Panda
Liberty project, the plant is specifically designed to monetize Marcellus shale gas by converting this cheap source of gas to electricity in the most efficient way.
In November last year officials from across Pennsylvania joined Panda Power Funds to commission the compa- ny’s 829 MW combined cycle ‘Patriot’ generating station located in Lycoming County. The Patriot project is only the second plant in the United States, after Panda’s ‘Liberty’ Pennsylvania power project, to use Siemens’ H-Class gas turbines in a single-shaft configuration, demonstrating the value of the latest high efficiency advanced gas turbines in
Pennsylvania presents a great oppor- tunity for developers of gas fired power plants. Like much of the US, the state is going through a transition from coal to natural gas, driven by legislation de- signed to reduce power plant emissions as well as the availability of cheap, abundant, shale gas.
Where some regulated markets are still dominated by local utilities, which allow old, inefficient coal fired plants to continue operating by including costs into the rate base, as part of the PJM de- regulated territory, Pennsylvania, offers the perfect breeding ground for highly efficient base load gas fired generation
Derek Porter, Chief Operations Of- ficer, Panda Power Funds, said: “We believe it’s the best functioning market in the US. Under true market conditions we have the opportunity to bid the plant day-to-day from an electricity stand- point, and what separates it from some of the other markets is the capacity pay- ments. A generator in PJM can bid into capacity auctions that occur annually to receive a payment for capacity needed three years into the future.”
Access to cheap fuel further improves the commercial attractiveness of the plants. According to Panda, they are the first plants to be specifically sited to ac- cess Marcellus shale. As Bill Pentak, Vice President Investor Relations and Public Affairs, Panda Power Funds, put it: “These were the first two plants born of the Marcellus shale.”
The origins of the projects date back to around 2012 when Moxie Energy ap- proached Panda to take over develop- ment of the plants. Pentak recalled: “What we had was the financial acumen to get these projects across the finish line. Once certain issues were resolved, we purchased them in development from Moxie.”
Patriot has an estimated cost of around $830 million – the Energy In- formation Agency calculates the capital cost of new build combined cycle plants at $1 million per installed MW.
Having worked with Panda on several previous projects, Siemens also became involved at an early stage. Notably, Siemens Financial Services provided financing to aid in the construction of Patriot through a $75 million term loan.
Martin Tartibi, Senior Executive Vice President, Siemens Energy Solutions Americas, noted: “There was a lot of up- front collaboration to make sure we were meeting the plant’s needs in terms of per- formance, financial and environmental issues, etc., for the PJM market. When the project transitioned from Moxie to Panda, it was built on our strong history and partnership with Panda. Patriot and Liberty are the fourth and fifth projects that Siemens has commissioned through that relationship.”
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