Working Energy-Only Market Continues to Attract New Investment in Texas; Panda Announces Financing, Construction for Sherman Plant

Panda Power Funds today announced that its affiliate Panda Sherman Power, LLC has successfully completed the financing on its planned 758-megawatt natural gas-fueled, combined-cycle power plant in Sherman, Texas.

The company will immediately start construction on the 204-acre site and expects commercial operations to begin by the end of 2014.

The announcement follows an earlier announcement from Panda that Panda Temple Power, LLC successfully completed the financing on another 758-megawatt natural gas-fueled, combined-cycle power plant, this one in Temple, Texas, and that construction has started.

The two Panda plants alone include 1,516 MW of capacity, and continue a series of new announcements showing that the current energy-only market in ERCOT is successfully attracting new investment at a $4,500 price cap and would undoubtedly attract adequate capacity at the $9,000 level (or higher level).

Last week, Wood Group GTS announced that it has secured a $24 million contract with NRG Energy subsidiary Petra Nova to design and construct a 75 MW gas turbine peaking facility at the W. A. Parish Generating Station.

Previously, Calpine announced 520 MW of new capacity in Texas to come online in 2014, while IPR-GDF Suez Energy Marketing North America, Inc. said that it would complete capacity enhancements at existing sites totaling 134 MW by December 31, 2012.

For Panda Sherman Power, LLC, Goldman Sachs and Credit Suisse arranged the senior debt financing for the plant. Ares Capital was the documentation agent. Panda Power Funds is supplying equity for the Sherman project along with several other institutional co-investors.

"The financing market that was tough as nails two months ago is starting to show signs of movement in our direction," said Todd W. Carter, president and senior partner of Panda Power Funds. "While it was still a long, hard march to closing, calls were coming in to us from many different quarters to be a part of this project."