In fall 2012, construction began on Panda Power Funds’ Temple I Power Project located in the Synergy Industrial Park in Temple, Texas. When the power station comes online in 2014, it will spread across 250 acres, boast a gross installed electrical capacity of 758 megawatts, and be able to supply the power needs of approximately 750,000 homes in the Central and North Texas regions.

It also will be among the cleanest natural gas-fueled plants in the United States, with carbon monoxide emissions of less than 10 parts-per-million (ppm), and nitrogen oxide (NOx) emissions less than 2 ppm. Panda Power estimates that 400 to 500 personnel will be employed at the plant at peak construction. According to an economic impact analysis conducted by Impact Data Source of Austin, Texas, the construction and ongoing operation of the plant will infuse more than $505 million into the area’s economy over the next 10 years.

Financing Panda Temple I and Sherman Projects

Siemens Financial Services Inc. (SFS) provided $25 million of the loan that helped finance the Panda Temple I project, which includes a $300 million order for a Siemens Flex-Plant™ 30 power station and a long-term service agreement from Siemens Energy. SFS acted as an advocate for Panda Power throughout the financial structuring of the Temple I project, becoming an anchor member of the lending syndicate. In this role, SFS helped to ensure the successful closing and funding of the loan. Based on this positive interaction, Panda Power requested that SFS participate in the financing of its next power project in Texas.

As Siemens Energy and consortium partner Bechtel were breaking ground in Temple, SFS stepped in to support Panda Power’s second high efficiency natural gas-fired power plant project in Sherman, Texas, with a one-stop solution that includes a $35 million portion of the construction financing. As in the Temple I project, Siemens Energy will supply the power island package outlined in the fixed-price, date-certain EPC contract. Goldman Sachs and Credit Suisse acted as the lead arrangers of the transaction. The equity in both projects will be supplied by Panda Power Funds as well as by several other institutional co-investors. Similarly to Panda Temple I, Panda Sherman will have a gross installed electrical capacity of 758 megawatts and provide electricity for approximately 750,000 homes in the North Texas region.

First Merchant Power Transactions in Nearly a Decade

The Panda Temple I and Sherman projects represent the first merchant power transactions with construction risk in the Texas Power Market to be financed in nearly a decade. That being the case, the team at SFS had to assess the market risk, including future market price forecasts and the expected plant usage, in order to properly underwrite the deals. SFS also had to work with the projects’ non-traditional hedge structures. This atypical arrangement is currently the first hedge structure of its kind to attract third-party financing.

In April 2013, Siemens was awarded a $300 million order for the turnkey supply of the Panda Temple II Power Project, located adjacent to Panda Temple I at the Synergy Industrial Park and scheduled to be completed at the end of 2015. As in the other two Panda projects, Siemens will supply the power plant in partnership with Bechtel, which will be responsible for the engineering and procurement for the balance of the plant, and the installation, construction and commissioning of the facility.

Flexible Technology With Fast Start Capability

All three plants will be equipped with Siemens' combined-cycle Flex-Plant 30, an environmentally-friendly solution that can commence power generation within 10 minutes of startup, and full base-load power production in less than one hour. Siemens is the only OEM that has delivered and operated a power plant with these flexible capabilities.

Siemens’ power island equipment on the three projects includes SGT6-5000F gas turbines, SST6-5000 steam turbines, SGen6-1000A generators, SGen6-2000H generators, the SPPA-T3000 instrumentation and control system, as well as Benson® heavy duct-fired heat recovery steam generators manufactured by NEM. The SGT6-5000F has a 13-stage highly efficient compressor and a four-stage gas turbine with power capacity of 208MW. The SST6-5000 steam turbine includes a combined high-pressure/intermediate-pressure cylinder, one double flow low-pressure cylinder and has capacity up to 300MW. The Shaping Power feature of the gas turbines enables the plant to generate higher yield during hotter days. SGen6-1000A is a hydrogen-cooled generator with efficiency up to 99 percent.

Deal of the Year

In March 2013, Project Finance Magazine recognized the Panda Sherman and Temple I projects with its “Deal of the Year” award. The award acknowledges excellence in innovation, best practice, deal repeatability, risk mitigation, problem solving and value for money. The award underscores Siemens’ ability to provide complete solutions for its customers, including project financing solutions.

Kirk Edelman  is CEO of project and structured finance – energy for Siemens Financial Services. For more information, visit finance.siemens.com/financialservices/us/pages/index.aspx.