Competitive Power Ventures' challenge
According to the U.S. Energy Information Administration, the average American now gets approximately 40 percent of their total energy from electricity.
Competitive Power Ventures (CPV) is dedicated to meeting this demand responsibly.
In partnership with its host communities, CPV develops and operates state-of-the-art energy facilities that run on clean, domestic energy sources. Through combined-cycle natural gas and wind-powered generation, the company provides affordable electricity to high load areas across North America.
CPV is currently developing nearly 6,000 megawatts of natural gas projects, including the $900 million Sentinel Energy Project: an 800-megawatt power plant under construction near Palm Springs, California. As a critical backup to surrounding wind farms, the project will protect the region from dangerous blackouts by providing peak power on demand.
While southern California's economic and environmental sustainability depends on vital energy infrastructure projects such as Sentinel, developing these projects has become increasingly difficult. The regulatory environment is complex, compliance is costly and, due to permitting delays, it can take far longer than anticipated to complete the project and reach financial close.
To succeed in developing Sentinel, CPV needed an investment partner with the experience, commitment and capabilities to help overcome delays and regulatory challenges.
“GE Capital understands the challenges of development in a way that other financial institutions don't… GE Capital, through difficult times, actually increased their investment in project. That's not something the average bank would do.”
GE Capital's strategy
As a long-standing partner of CPV, GE was uniquely capable of providing development capital, project financing and power-generation technology for Sentinel.
GE's engagement with the project has spanned five years: the first two with the GE Energy Global Development & Strategic Initiatives Group, and the past three with GE Energy Financial Services (EFS). This ongoing commitment has involved a significant exposure on GE's books that would not (and in most cases could not) be sustained by another financial institution—particularly during a financial crisis.
An extensive network of GE relationships, coupled with a track record of success on similar projects, helped win the participation of key energy development lenders. This high-profile participation led to the debt financing for Sentinel being 2.4 times oversubscribed, and broke a logjam in the US energy financing market.
When the project stalled over a particulate issue, GE's familiarity and engagement with the regulatory environment and governing bodies of California enabled the successful passage of a project-specific law (California AB 1813) necessary to move Sentinel forward. And the entire facility will be built upon GE's unparalleled technology: eight highly efficient, fast-start, ecomagination-certified GE gas turbine generators.
The results
When it becomes operational in the summer of 2013, Sentinel will be able to power approximately 640,000 homes and provide an estimated $6.4 million in annual property taxes. But the project’s immediate benefits to the region are no less significant: 300 construction jobs with a $40 million payroll, 400 indirect jobs with a $15 million payroll, and an estimated $30 million in sales tax revenues.
By facilitating the integration of wind and solar power into the electric grid, Sentinel will also support California in meeting its goal of generating 33 percent of its power from renewable sources by 2020.
Through a long-term commitment and in multiple roles, GE was able to offer CPV solutions unmatchable by other financial institutions. GE's rich history in the development of not just energy projects, but energy-generation technology itself, makes GE Energy Financial Services the ideal financial partner for energy project developers.
The Future of Renewables
Middle Market Indicator Q4 2012
