Chicago-based power company Exelon Corp. EXC -0.06% is expanding two gas power plants in Texas, at a time when power demand in the rest of the country remains stagnant.
Exelon announced Monday it will purchase four of General Electric Co. GE +0.79% ‘s newest heavy-duty gas turbines as part of an expansion of a pair of power plants near Houston and Dallas. It represents the first sale of GE’s newest gas turbines in the U.S.
The order, worth more than $500 million, provides a boost to GE’s gas turbine business in the U.S., where orders have been anemic for years. GE instead has looked for growth in global markets including Japan, France and Russia, which have also bought GE’s newest H-class turbines.
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Exelon, one of the country’s largest power-generation companies, is making a push to expand further into gas. The company, which also distributes natural gas to customers in Maryland, Illinois and Pennsylvania, earlier this year purchased an under-construction liquefied natural gas terminal near Brownsville, Texas, which will be used to export shale gas.
Power demand is rising in Texas, creating the need for new generating capacity to avoid insufficient supply in the future. Exelon will deploy the new turbines at existing gas-fired power stations in Colorado Bend, southwest of Houston, and Wolf Hollow, outside Dallas.
Construction is slated to begin at the two plants in 2015 and will add about 1,000 megawatts of capacity to each, GE said. Operation of the new units is expected to begin in 2017.
The Texas plants will operate in a “combined cycle,” with excess heat from the gas turbines powering steam turbines, squeezing more energy from each unit of fuel.
In its choice of the new gas units, Exelon said it not only focused on lower fuel consumption but also on lower water use, a critical factor in Texas, which has been plagued by drought and already faces heavy demand from water related to oil and gas production.
GE’s newest gas turbines will be air-cooled, significantly lowering its dependence on local water resources.
GE earlier this year agreed to buy the energy assets of Alstom SA, ALO.FR -0.33% the world leader in steam turbines. GE has said it is betting that access to Alstom’s steam turbine technology will boost GE’s competitiveness when it seeks to sell new combined-cycle power generation units, like those Exelon is purchasing.
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