Texas Combined Cycle Plant Changing Hands

Rayburn Electric Cooperative, headquartered in Rockwall, Texas, announced on April 19 that it has entered into a definitive agreement to acquire ownership of the Panda Sherman Power Plant. The Sherman facility is a 758-MW natural gas–fueled combined cycle unit located in Grayson County, about an hour north of Dallas. The plant will be renamed Rayburn Energy Station once the acquisition achieves standard closing conditions.

“Rayburn Energy Station allows us to expand our capacity to more reliably and affordably serve our Member cooperatives here in North Texas,” Rayburn President and CEO David A. Naylor said. “The addition of this key resource to our portfolio of solar, hydro and market purchases strategically positions Rayburn to ensure our Member cooperatives are served with a broad energy resource mix necessary to meet growing demand, extreme weather events, as well as the evolution of the Texas energy market.”

S&P Global reported in September last year that Panda Power Funds LP, the private equity infrastructure firm that owns the station, was planning to sell the plant. Bids were reportedly due in October. It’s unknown how many parties submitted offers, but a deal with Rayburn was ultimately finalized.

The Sherman plant (Figure 1) began commercial operations in 2014. It was awarded a POWER Top Plant award in September 2015. The station includes two Siemens SGT6-5000F gas turbines, each of which feeds an NEM USA Benson heavy duct-fired heat recovery steam generator, with the steam powering a Siemens SST6-5000 steam turbine. Siemens also supplied the generators, instrumentation, and control system. Bechtel acted as the engineering, procurement, and construction contractor for the project.

Perhaps the most difficult aspect of the construction project involved financing. Panda was unable to secure a power purchase agreement for the plant prior to breaking ground, in large part because of the state of the Electric Reliability Council of Texas (ERCOT) market at the time. POWER Associate Editor Tom Overton reported in 2015, “Frustrated in its drive to secure conventional financing, Panda took the unusual step of creating a hedge for the banks backing the deal. Known as a ‘revenue put,’ the method functions as insurance for investors on the plants’ future revenue by setting a floor on the projects’ gross margins, with Panda holding the bag if income were to fall short.”

It was a risky and expensive move for Panda, but the unconventional financing measure got the plant built. Since entering commercial operation, the plant has run fairly consistently over the years. Its best year was 2018 when it generated 3,645,692 net MWh. The lowest output was recorded in 2021 when it produced net generation of 2,299,646 MWh. Most years, Sherman has been above 3,000,000 MWh.

Rayburn is a generation and transmission cooperative formed in 1979 that acquires and transmits energy to four member-owned, power-distribution cooperatives: Fannin County Electric Cooperative, Grayson-Collin Electric Cooperative, Farmers Electric Cooperative, and Trinity Valley Electric Cooperative. The four member cooperatives collectively serve more than 500,000 Texas residences and businesses. Rayburn owns 265 miles of transmission line throughout North Texas, as well as a 25% interest in the Freestone Energy Center, which produces more than 1,000 MW of natural gas combined cycle energy in Freestone County, Texas.

—Aaron Larson is POWER’s executive editor (@AaronL_Power, @POWERmagazine).

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