Xcel Energy, which acquired the Mankato Energy Center in a deal closed only earlier this year, is now selling the combined cycle gas turbine power plant to fund corporate giving and support related to future COVID-19 recovery.
Denver-based Southwest Generation is buying the 760-MW Minnesota CCGT plant for $680 million. Xcel CEO Ben Fowke noted the importance of the Mankato Energy Center to customers in the upper Midwest U.S. but also highlighted the needs brought on by the coronavirus pandemic which has affected more than 360,000 Americans and killed about 11,000 just in the past three months.
“This is an unprecedented time, and we want to do our part to support our communities as we face the challenges brought on by the COVID-19 pandemic,” Fowke said in a statement. “The Mankato Energy Center and its workforce provides essential services for local and regional economies and that will not change. And now more than ever, the people we serve need safe, reliable, affordable power.”
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Xcel acquired Mankato in a transaction with Southern Co. affiliate Southern Power for $650 million. The acquisition was completed in January.
Xcel previously had been acquiring energy from the gas-fired Mankato plant under a power purchase agreement (PPA). The CCGT plant will continue to provide power to the same customer region.
“Southwest Generation is excited to add the Mankato Energy Center to our growing portfolio,” John Foster, CEO of Southwest Generation, said. “The plant is a key part of the transition to a lower carbon grid and we’re pleased to expand our relationship with Xcel Energy, which is leading that transition in the United States.”
The sale is expected to close in the third quarter of 2020 and is not expected to have a material impact on short or long-term earnings. Xcel will use the proceeds to pay down debt and increase its ability for corporate giving related to COVID-19’s disruption, according to the company statement.
Current employees are expected to continue working at the plant and Xcel Energy will continue buying power from the facility.
Independent power producer Calpine Corp. built the Mankato Energy Center in the previous decade. It sold the plant to Southern Power in 2016 for nearly $400 million.
The original 375-MW unit was supplemented with an expansion project building a second, 345-MW unit that was commissioned last year.
Globally, the outbreak of the new coronavirus has totaled more than 1.3 million confirmed cases with nearly 80,000 deaths. Most countries, including the U.S., have gone into social distancing postures and basically brought much of their economic activity to a standstill.
(Rod Walton is content director for Power Engineering and POWERGEN International. He can be reached at 918-831-9177 and [email protected]).