As retirements of coal-fired plants and a tightening reserve margin in ERCOT have fed into talk of financing new-build peakers in Texas, one developer has gone ahead and done it, with debt underwritten by an insurance group.
Two greenfield gas-fired simple-cycle facilities, developed and financed by Castleman Power in Victoria County, are due to come online later this year. Dubbed Victoria City Power and Victoria Port Power, the two projects each have a capacity of 100 MW.
The construction and term financing, comprising first and second lien debt, was underwritten by Prudential Capital, which has since attempted to sell down some of the senior paper.
Whether the syndication effort had borne fruit could not immediately be established, but a senior project finance banker said today that he thought Prudential was still marketing the deal.
“Prudential had tried to sell a $50 million piece of the $100 million first lien paper last year,” says a second project finance banker, whose firm had also been approached with the deal.
“There was an issue around them [Prudential] waiving their voting rights, since they also held some second lien paper, so we couldn’t get it past committee," the banker added, referring to his institution's credit committee.
The debt was pitched at around 450 basis points over Libor, he recalled. The first project finance banker described the deal as "interesting" but did not go into specifics.
The terms of the deal could not be confirmed. Lead developer and ceo of Castleman Power Ryan Castleman in Houston and spokespeople for Prudential in New York did not respond to inquiries by press time.
Castleman signed interconnection agreements for the pair of projects in March of last year, according to ERCOT’s interconnection queue, which notes that Victoria Port Power is due online in May of this year and Victoria City Power by November.
The projects represent an investment of up to $125 million, according to a local news report from last year (Victoria Advocate, 5/23/18). Construction began in April 2017.
NAES is providing operations and maintenance services for the peakers, which are being fitted with refurbished General Electric LM6000 turbines. Engineering consultant Commonwealth is also assisting Castleman with development.