AES Corp. has closed on a $2 billion financing deal for a 1,284 MW combined-cycle gas plant with 100 MW of battery storage.
The financing consists of $1.475 billion of senior secured notes amortizing through 2040 and a $492 million senior secured term loan amortizing through 2027, with a combined weighted average cost of debt of approximately 4.5%.
AES is contributing about $350 million in equity to the project. The project is supported by a 20-year power purchase agreement with Southern California Edison that was awarded through a 2014 competitive solicitation.
AES’ Southland project is replacing 3.9 GW of 1960-era power plants at Alamitos, Huntington Beach and Redondo Beach that AES bought from Southern California Edison in 1998 when California restructured its power sector.
Alamitos and Huntington Beach power plants were scheduled for closure to address damage to aquatic life because of once-through cooling concerns. AES recently installed synchronous condensers at Huntington Beach to help alleviate power fluctuations expected from the closing of the San Onofre nuclear plant. AES is searching for partners to develop the Redondo Beach site for non-industrial use.
Construction on the new, replacement projects has already begun at the Huntington Beach site and is expected to begin at the Alamitos site this month. The new gas plant is expected online in 2020 and the battery storage unit in 2021.
AES says the Southland financing is the largest non-recourse financing for a battery-based energy storage project. Construction is being handled by Kiewit Power Constructors under a fixed-price, date-certain, turnkey EPC contract.
Under the PPA with SCE, all of the capacity from the new plant will be sold to the utility in exchange for a fixed monthly capacity fee that covers fixed operating cost, debt service and return on capital. SCE also will reimburse AES’ variable costs and provide the natural gas and charging electricity.
AES says it also has permitted 600 MW of additional capacity at Alamitos and Huntington Beach and is ready to respond to future solicitations if more resources are needed.
“The $2.3 billion Southland repowering project is a key component of our strategic objective of increasing our U.S. Dollar-based, long-term contracted position,” Andres Gluski, AES president and CEO, said in a statement.