Boards approve FPL takeover of Constellation

FPL Group is to acquire Constellation Energy Group in an $11.1bn all-stock deal after the boards of the two companies agreed to create what will be one of the USA’s largest power generators.

The new company will trade under the Constellation Energy name due to its greater national presence. Both companies have recently adopted aggressive expansion programmes and now believe there is more potential for growth together than there was separately.

At over 45 000 MW, Constellation Energy will have the largest generation portfolio in the USA and should return annual revenues of around $27bn. The deal is expected to close before the end of 2006, creating a company serving customers from Maine to Florida.

FPL will name nine of the 15 member boards and will also name its current chairman, president and CEO, Lewis Hay III, as the chief executive officer of the new Constellation Energy.

Climate conference sets post-Kyoto agenda

A new group created at the recent United Nations Climate Change Conference held in Montreal, Canada will begin discussing in May ways in which developed countries can reduce emissions when the Kyoto Protocol expires in 2012.

More than 40 decisions that will affect the global effort to combat climate change were adopted at the Conference, including the Marrakesh Accords, otherwise known as the Protocol’s rulebook.

In addition to this, the Kyoto Joint Implementation mechanism was launched, enabling developed countries to invest in other developed countries in order to earn carbon allowances that can be used to meet their emission reduction commitments.

Ecuador’s new power plan courts private players

The latest attempt from the Ecuadorian government to solve its chronic power problems will see private investors building new hydro or natural gas fired generation capacity exonerated from income tax, import duties, operating taxes and other similar charges.

Depending on the location of the new power plants, investors could benefit for up to 12 years from the incentives offered in the major energy policy overhaul designed by the state to make the country’s power sector more stable.

Under the legislation, public-private alliances will be encouraged, as will the development of merchant generation projects that can sell surplus power to the grid. According to the chairman of energy regulator Conelec, the country is in need of an immediate 200 MW of new capacity and will need the same amount added every year for the foreseeable future.

Contract for Pacific plant awarded

Mexican state owned power company, CFE has awarded a consortium that includes Mitsubishi Corporation the contract to build the 651 MW Pacífico coal fired power plant, after it extended the bid deadline for the third time.

The Mitsubishi consortium, which also features the Mexican company Carboeléctrica Diamante, was successful with a $611m bid, beating offerings from Hitachi and Siemens.

To be built on the Pacific coast with public finance, the power plant will primarily be coal fired, although it will have the ability to use fuel oil. Its construction is part of CFE’s efforts to combat the impact of volatile US natural gas prices.

Brazilian firm wins its largest foreign order

A Brazilian construction company’s efforts to expand internationally have been rewarded with a $450m contract in Colombia, its largest foreign project win to date.

Construcoes e Comercio Camargo Correa will head a consortium at the Porce III hydroelectric project, with the Colombian firms Conconcreto and Coninsa as partners. The total cost of the project is expected to be $900m.

The new plant will have a capacity of 660 MW and will begin generating in the second half of 2010. The project will provide the Brazilian firm with a challenge due to the 12 km-long delivery tunnel between the dam and the underground power station.

Domestic firms triumph in Brazil

Domestic companies won six of the seven contracts offered at Brazil’s first auction for new power generation projects. The only successful foreign company was Iberdrola of Spain, through its Brazilian company Neoenergia.

Of the 11 projects originally planned for auction, only seven were awarded due to court rulings or licensing issues.

Added together, the seven projects – all hydro – will add 805 MW to the country’s power grid when they begin operating in January 2010, the year that demand is expected to exceed supply.

News digest

Barbados: A new 60 MW plant will be built to meet increased demand after Mott MacDonald was awarded a contract to design and manage a $100m plant and replace equipment at the end of its life.

Brazil: The Inter-American Development Bank has approved $331.4m in financing to support the expansion and upgrade of Centrais Elétricas do Pará’s and Centrais Elétricas Matogrossenses’ power distribution systems.

Canada: Bids are being evaluated for two hydropower projects worth a combined $5.1bn, which will generate 2800 MW when they start operating at Gull Island and Muskrat Falls in 2013.

Central America: Companies that have bid for contracts on the 1800 km Siepac electricity transmission line that will interconnect six Central American countries will find out in the next few weeks whether they have been successful.

Chile: GE Energy Financial Services has paid $24.4m for an 80 per cent interest in three 220 kV transmission lines spanning 295 km in Chile. Built and previously owned by Abengoa, the company will continue as lead manager.

Peru: Following the Initial Public Offering of 17.2 per cent of EnerSur, Suez Energy International owns around 62 per cent of the company’s equity, with institutions and individuals now holding 38 per cent.

USA: A group of Californian power companies and regulators are testing a first of its kind energy storage technology that aims to increase reliability on the grid. The scheme is based on a series of large, high-speed flywheels.

USA: Cambridge Energy Research Associates has predicted that 100 000 MW of merchant generating capacity will be traded over the next 12 to 18 months, the same amount that was traded in the last three years combined.

USA: CMS Energy will hold a competitive bid process to sell the Palisades nuclear power plant by 2007. It is seeking to extend the plant’s operating licence by 20 years.

USA: Sea Breeze Power and Pacific Gas & Electric have signed a Memorandum of Understanding for the construction of an undersea 1600 MW transmission line.

USA: The Department of Energy has entered into an agreement with the FutureGen Industrial Alliance to develop a zero emission coal fired power plant with hydrogen production and carbon dioxide sequestration capabilities.

USA: The Electric Power Research Institute is to develop distributed energy after a collaborative project was selected to receive funding from the Department of Energy.