Shell Energy North America (US), L.P. (SENA), a subsidiary of Shell plc (Shell), says it has signed an agreement to acquire a 100% equity stake in RISEC Holdings, LLC (RISEC), which owns a 609-megawatt (MW) two-unit combined-cycle gas turbine power plant in Rhode Island, USA.
Shell has in its statement, posted to Energy Window International, said the acquisition intends to secure a long-term supply and capacity offtake for Shell in the deregulated Independent System Operator New England (ISO New England) power market, where SENA, according to Shell, has held a contract with RISEC under an energy conversion agreement for 100% of the plant’s energy offtake since 2019.
Huibert Vigeveno, Shell Downstream, Renewables & Energy Solutions Director said: “Shell has had a successful integrated gas and power business in the growing ISO New England market for over 20 years, and this acquisition secures valuable trading opportunities by guaranteeing SENA’s position in the market.”
“Our strong understanding of this plant’s performance positions Shell to capitalize on its value within our existing trading portfolio.”
The statement further disclosed that RISEC’s combined-cycle gas turbine power plant usually supplies power to the ISO New England power market where demand, according to the statement, is expected to increase in coming decades due to growing decarbonisation efforts in sectors such as home heating and transportation.
Adding that the acquisition will be absorbed within Shell’s cash capital expenditure guidance, which remains unchanged.
The transaction Shell said is however subject to regulatory approvals, and is expected to close in the 1st quarter of 2025.
With RISEC signalling an intent to sell, according to the editorial note, the acquisition will now allow Shell to continue an energy supply agreement which dates back to 2019, while securing its long-term energy offtake from the plant, thereby maintaining the company’s position in the ISO New England power market. The acquisition preserves SENA’s current operations and mitigates market risk by ensuring a reliable and stable power generation source, Shell disclosed.
RISEC’s two-unit combined-cycle gas turbine power plant has a maximum capacity of 609 MW and an average operating capacity of 594 MW. Serving the ISO New England market, the plant is located outside Providence, Rhode Island, and has been in operation since its completion in 2002.
Combined-cycle gas turbine power plants generate electricity via gas turbines, and capture waste heat to produce steam, which drives steam turbines for additional power: a process which enhances efficiency and reduces emissions compared to single-cycle power plants. Such plants provide reliable, flexible power, which balances the intermittency of renewable energy sources like wind and solar, the Company had explained.
The acquisition is projected to generate an internal rate of return (IRR) well in excess of the hurdle rate set for Shell’s Power business.
The parent company of RISEC according to Shell, is 51% owned by funds managed by global investment firm Carlyle, while the remaining 49% is for EGCO RISEC II, LLC, a subsidiary of Electricity Generating Public Company Limited (EGCO), a Thai public limited company.
SENA is a full-service energy company providing energy solutions across all aspects of the market. SENA has been active in North American wholesale energy markets for over 25 years and is a market leader in wholesale and retail power, natural gas, and environmental products.