Summit Power plans to close financing on its ambitious $1.75 billion, (almost) carbon-neutral power plant by the end of the year.
Almost, because once operational the plant will capture 90 percent of its expected CO2 emissions.
In terms financing Summit is literally 20 percent there, having already secured, late last year, a $350 million grant from the U.S. Department of Energy.
Laura Miller, a director with Summit Power, tells GER that from now until December it plans to raise some $550 million in equity investment from a single investor — or a group of investors — for a majority stake in the Penwell, Texas-based power facility.
The balance of the project cost — about $1 billion — will be raised via long-term, none recourse bank debt. Miller declined to name investor and project finance banks it was in talks with. “Talks are ongoing,” she says. “The DOE grant and the Obama administration’s support for clean coal projects are obviously fueling interest from investors.”
It’s been a hectic ride for Summit. Last year it had to take over the project from majority owner Babcock & Brown, the Australian bank and early victim of the global financial crisis.
Once operational in 2014, the 400 megawatts power plant will use integrated gasification combined cycle (IGCC) technology to converts its coal feedstock into a clean-burning mix of hydrogen and carbon monoxide known syngas.
Miller, the former Dallas mayor who is now overseeing the project’s development, says the plant will generate a third of its revenues from the sale of the captured carbon to West Texas oil developers who will inject it in antiquated oil wells as a way to recover hard to access crude reserves. The plant will also sell a little more than half of its output via a long-term power purchase agreement.