After years of planning and protest, NRG Energy Inc. sold a repowered peaking facility at its Encina Power Station, a natural gas- and oil-fired power plant in Southern California, but the company will continue to own and operate a 95-acre coastal site where the power station sits.
CEO Mauricio Gutierrez said the sale was part of a broader exit of the renewable energy sector. The company has sold off its NRG Yield Inc., GenOn and South Central businesses.
NRG sold the project to private equity firm Global Infrastructure Partners (GIP) for $397 million early last year.
The California Energy Commission approved long-stalled plans to transform part of the site in north San Diego County into a state-of-the-art gas-fired peaking facility in 2015, leaving two-thirds of the site for future commercial or industrial development. The project was built and came online at the end of last year as a set of five 100-MW gas-fired peaking units. NRG is operating the gas-fired power facility under a long-term contract.
A unit of Poseidon Water operates a desalination plant on another part of the site, and the original Encina gas-fired plant takes up the rest of the land, which NRG plans to work with a developer to convert to commercial properties.
"The primary condition to close the Carlsbad transaction was the completion of the sale of NRG Yield and [NRG's renewables business]," NRG said in a Securities and Exchange Commission (SEC) filing. With those closures, "the company concluded that the Carlsbad project met the criteria for discontinued operations."
According to the SEC filing, NRG continued to consolidate Carlsbad for financial reporting purposes until the sale closed last month. The merchant power company will continue to have a "ground lease and easement agreement" with GIP until 2039, with two 10-year extensions possible.
NRG’s GenOn unit decided to close three other gas-fired generation plants in Southern California one year ago, underscoring the region's abundant supply of generation and a desire to de-emphasize fossil fuel-fired power plants, particularly older coastal sites.
California years ago banned the use of sea water to cool nearly two-dozen mostly gas-fired generation plants along the Pacific Coast, including the Carlsbad site.
NRG reported a 4Q2018 loss of $93 million, compared to a loss of $1.3 billion in 4Q2017. No quarterly share impacts were reported. For the full year 2018, NRG had $460 million (87 cents/share) in income from continuing operations, compared with a loss of $1.3 billion (minus $6.79) for all of 2017.