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Quantum Energy Partners launches US power development company
- 13 years ago (2010-09-22)
- Junior Isles
Private-equity firm Quantum Energy Partners (QEP) is launching a new company to buy and develop power plants in the U.S., targeting long-term supply deals with utilities.
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“Quantum Utility Generation LLC” will launch with $500 million in capital from QEP and an additional $500 million from investment partners. The new company will be run by Larry Kellerman, former president of Cogentrix Energy, a power plant generation subsidiary of Goldman Sachs Group Inc.
Quantum enters a robust market for asset deals in the US as regional power prices remain depressed. In the last six weeks, private-equity giant Blackstone Group LP (BX) agreed to buy Houston-based generator Dynegy Inc. (DYN) and PPL Corp. (PPL) agreed to sell several plants to LS Power, a power-generation and transmission investment group.
Quantum executives have said their strategy is not to bet on a rebound in electricity prices. Instead, the new company plans to buy and develop plants with an eye to inking long-term agreements with utilities with specific supply needs.
"It is the right assets, in the right locations linked in with the right utility market where we can find undervalued generation that truly makes sense as a long-term resource" said Kellerman, chief executive of Quantum Utility Generation.
Quantum has stated it expects the need for new power supplies will increase as older coal fired plants are shut down in the face of increasing environmental regulations. Meanwhile, state renewable energy requirements will drive the development of new wind and solar generation.
Quantum is targeting markets in the Midwest, Southeast and Southwest for investments, and expects to steer clear of more deregulated markets in the Northeast. Executives said Quantum will likely focus on natural gas fired plants and wind and solar power generation. In particular, the company is aiming to reach long-term agreements with utilities to sell power supplies, the power plants themselves or a combination of the two.