Megaproject

POWER NEWS

Best Practices For Building Tomorrow'S Power Leaders During Record GrowthAfter several years of relatively steady demand, U.S. electricity demand is now surging, driven by various factors, including commercial sector growth, the urgent development or expansion of data centers, and the adoption of new power-hungry artificial intelligence (AI) technologies. As the U.S. Energy Information Administration recently announced, the country’s power consumption will reach record highs in 2024 and 2025. COMMENTARY In response, the U.S. is adding the most new power generation capacity in more than two decades. The sector is pursuing this critical growth at a time when the aging workforce gap has been met, but the workforce is less experienced than in prior years. According to the Center for Energy Workforce Development, “The aging workforce gap has been addressed and replaced with the new challenge of developing a younger workforce.” In total, more than half of utility workers (56%) have fewer than 10 years of service, requiring workforce planning efforts to incorporate training, mentorship, and upskilling alongside talent identification and recruitment efforts. The stakes are high. Power generation is a tightly regulated, capital-intensive industry that requires precise workforce development to ensure reliability, safety, and efficiency. The power industry’s ability to transfer critical knowledge hinges on three interconnected elements: ensuring younger workers thoroughly understand core processes, mastering documented procedures, and gaining irreplaceable hands-on experience through direct observation and participation. Of course, it also requires a culture in which experienced leaders have a collaborative mindset, a commitment to high standards, and actively involve and engage younger employees. A multi-generational workforce can be enormously beneficial for utilities. However, harnessing the skills and competencies of each generation can also pose several unique challenges, including: ● Scheduling preferences: Younger workers often prioritize flexibility and autonomy in their schedules. They want less rigid requirements about being at the plant or on-site unless their role requires it, which can chafe the established expectations of more veteran employees. This requires a results-oriented management team that effectively balances flexibility with accountability. ● Technology and Process Changes: Younger workers are more likely to question outdated systems or processes and may push for technology upgrades to aging information systems or question established procedures. The benefits are obvious: new technologies can outperform legacy systems, and better, more efficient processes are better for everyone. Organizations must navigate the friction between maintaining proven methods and implementing efficiency improvements. ● Work Style Differences: Different generations tend to have their own expectations about work environment and management styles. In general, younger generations often prefer more collaborative, less hierarchical structures, and traditional power industry culture may clash with these differences in work styles. ● Knowledge and Experience Gap: Older employees have deep institutional knowledge, while younger workers bring fresh perspectives and new ideas. This can create a work environment where balancing respect for experience and openness to innovation is critical. Harnessing the benefits of a multi-generational workforce requires understanding the challenges and opportunities while developing protocols and practices that facilitate connection, collaboration, and knowledge sharing. Effective knowledge transfer in the power generation space results from intentional organizational and individual choices, habits, and practices. It involves: ● A Collaborative Mindset: This creates a positive environment of working with others, being open to different perspectives, valuing the contributions of others, and working together towards a common goal. ● Team Problem-Solving: Experience transfer can’t happen without doing work and solving problems together. This approach leverages each person’s diverse skills, knowledge, and perspectives to develop effective solutions. ● Safety-First Environment: Health, safety, and well-being are crucial in the power and utilities space. Leaders can create this environment by having clear policies and procedures, providing regular training so everyone understands protocols, encouraging open dialogue, continually evaluating potential risks, and setting a clear leadership example and commitment. ● Long-Term Development Focus: Developing others is done through deliberate leadership, training, delegation of tasks, and granting increased autonomy. Senior leaders today should take a long-term view of identifying, developing, and preparing successors. This also includes elements like creating a clear roadmap, investing in ongoing education and skill development, prioritizing continuous learning, and building relationships and networks that enable future leaders to lean on others for support. Knowledge transfer doesn’t occur accidentally. It’s the product of many intentional choices that produce progressively better individuals, teams, and companies. Facilitative leadership is a time-tested approach to developing skilled leaders in the power generation space. The approach emphasizes collaboration, participation, and empowerment. Specifically, facilitative leadership enhances leadership impact by balancing the needs to achieve results, maintaining effective processes, and building strong relationships. It offers a set of principles and tools for coaching and developing others, creating clear plans of action and shared language around making decisions and building agreements. For leaders and their teams, the benefits are multifaceted, including fostering employees who are more involved, engaged, empowered, and authentic. More specifically, facilitative leadership: Empowers Others: Facilitative leadership empowers others by creating an environment where individuals feel confident and capable of taking initiative, making decisions, and contributing to the success of the team or organization. As a result, senior leaders can elevate others in their understanding of operations or procedures. This allows for the building of confidence, facilitates learning and growth, and allows leaders to recognize the contribution of others. Seeking Maximum Appropriate Involvement in Decision-Making: Leaders in power generation often must balance regulatory requirements, operational efficiency, financial constraints, and customer needs. Facilitative leaders use the principle of involving the right people in the decision-making process to the greatest extent that is suitable for the situation. The idea is to balance participation with the need of the leader to maintain efficiency and control. This begins by identifying key stakeholders to determine who should be involved based on expertise, interest, or impact on the outcome. Next, facilitative leaders assess the situation to decide on the level of involvement needed from different stakeholders. They communicate clearly how decisions will be made and the role each person will play in the process. By using the principle of “maximum appropriate involvement” versus “minimum necessary,” facilitative leaders build buy-in and commitment while retaining control of the situation. Building Others’ Skills and Capabilities: Leaders can support team members in developing skills and capabilities. This is best done through an ongoing coaching relationship in which the leader coaches or develops the others. By having a powerful conversational process, leaders can guide, coach, and support others in gaining new insights, exploring challenges, and providing ongoing feedback—all critical elements for knowledge transfer and continuous learning. As power and utilities look to expand their capacity while also accommodating an emerging multi-generational workforce, facilitative leadership provides a framework for leaders at every level to build a collaborative culture. In summary, power and utility companies are best equipped to drive cultural transformation by equipping and empowering others to share knowledge effectively, make decisions as a team, improve interpersonal and process management capabilities, accelerate change adoption, and create higher levels of structured and collaborative problem-solving regardless of generation. As power companies rapidly expand their capacity and modernize their infrastructure, effective knowledge transfer is foundational and essential. Facilitative leadership provides the framework to bridge generational gaps, ensuring that critical experience and innovative ideas are shared seamlessly. By fostering a collaborative, inclusive culture where leaders at all levels are empowered to mentor and develop others, power companies can best meet today’s growing demands while training tomorrow’s workforce to maximize their potential in the months and years ahead. —Chris Williams serves as the chief operating officer for Interaction Associates. His background includes more than 10 years in the professional services space in business operations, recruiting, business development, and complex research roles. Learn more by visiting the company website and connect with Chris on LinkedIn.

powerplant

Jan 13, 2025

POWER NEWS

Constellation Moves To Acquire Calpine In $16.4B Deal, Forming Competitive Generation GoliathCompetitive generation giant Constellation has agreed to acquire Calpine Corp. in a $16.4 billion deal that is set to create the largest producer of clean and reliable energy in the U.S. with an asset portfolio of more than 60 GW. The definitive agreement, announced on Jan. 10, includes a cash and stock transaction valued at an equity purchase price of approximately $16.4 billion. The deal consists of 50 million shares of Constellation stock and $4.5 billion in cash, plus the assumption of $12.7 billion of Calpine’s net debt. “After accounting for cash that is expected to be generated by Calpine between signing and the expected closing date, as well as the value of tax attributes at Calpine, the net purchase price is $26.6 billion, reflecting an attractive acquisition multiple of 7.9x 2026 EV/EBITDA,” Constellation said on Friday. Calpine’s owners, led by Energy Capital Partners (ECP), will hold equity in the combined company and have agreed to an 18-month lock-up period. The deal is expected to close within 12 months, pending regulatory approvals. The acquisition will require regulatory clearance from the Federal Energy Regulatory Commission, the Public Utility Commission of Texas, and other agencies. Lazard and J.P. Morgan advised Constellation, while Evercore and Morgan Stanley served as advisors to Calpine. If finalized, the acquisition will mark a historic business combination—one of the largest for the U.S. generation business—merging the largest nuclear fleet in the country with the largest natural gas fleet. It will generate more electricity than any other company in the U.S. “We’re going to have more than 60 GW of capacity from nuclear, natural gas, geothermal, wind, and solar, an 80% increase to Constellation’s capacity, capability,” said Constellation President and CEO Joe Dominguez during an investor call on Friday. “These plants will produce an industry-leading 308 million MWh of electricity every year.” The newly combined Constellation-Calpine generation portfolio spans nearly 60 GW of capacity across the U.S., Canada, and Mexico, featuring a diverse mix of nuclear, natural gas, geothermal, solar, wind, and battery storage assets. Courtesy: Constellation The move is bold for Constellation, which has established itself as a major competitive generator committed to decarbonization since its 2022 spinoff from parent Exelon. The independent, publicly traded company today boasts the largest nuclear fleet in the nation, comprising 21 GW from 23 units, which provide baseload zero-emission power. In November 2023, it completed an acquisition of NRG Energy’s 44% ownership in the 2.6-GW South Texas Project Electric Generating Station (STP), a nuclear power plant located in Bay City, Texas, and in September 2024, the company partnered with Microsoft to commit $1.6 billion to restart Unit 1 of the shuttered Three Mile Island plant in Pennsylvania by 2028. Constellation’s massive 32.4-GW fleet also includes 12 GW of natural gas, oil, hydroelectric, wind, and solar assets, which provide baseload, intermediate, and peaking functions. Beyond generation, the Baltimore–headquartered energy giant has a significant customer-facing business, including an hourly Carbon-Free Energy (CFE) platform, which serves commercial and industrial (C&I) partners, with major customers like Microsoft and Comcast. The platform matches real-time customer demand with carbon-free generation to support their transition to 100% carbon-free power. On Jan. 2, Constellation secured a historic 10-year electricity purchase contract from the U.S. General Services Administration (GSA), partially bundled with CFE. The deal, which Constellation on Friday highlighted as a potential model for states and utilities, will fund license extensions and upgrades at its nuclear plants, increasing output by 135 MW. GSA is set to procure 2.4 million MWh of the new capacity to enable federal agencies to achieve 100% carbon-free electricity by 2030. Constellation on Friday lauded nuclear’s lucrative financial benefits, noting that it expects to capture significant value through the nuclear production tax credit (PTC), which could add more than $750 million in revenues, even under a 3% inflation scenario. The company also said it is evaluating opportunities to add up to 1 GW of additional nuclear upgrades across its fleet. It also highlighted recent regulatory changes that will allow merchant nuclear plants to participate in hydrogen production. Calpine Corp., founded in 1984, has transitioned from a small geothermal operator into a major energy provider with a 28-GW footprint in 22 states, Canada, and Mexico. After facing significant financial challenges, the company underwent a major transformation in 2018 to become a privately held entity backed by a select group of investors. Today, Calpine has a diverse fleet of 79 operational power plants, 61 of which are primarily combined cycle gas turbines (a combined capacity of 26 GW and 425 MW of new gas power plants under construction). Calpine, notably, also leads the nation’s generation of geothermal power, with 13 operating plants (a combined capacity of 725 MW) located in Northern California. In addition, it has a 740-MW solar and battery asset fleet, and another 160-MW under construction. Meanwhile, though Calpine is cultivating a growing fleet of carbon capture and sequestration projects, it has “no coal generation or coal liabilities,” Constellation noted. The combined portfolio of nuclear and gas-generating assets “is best-in-class” and well-suited to the combined company’s approximately 200 million MWh of retail electric load to customers across the country, Dominguez noted on Friday. “Our customer mix will remain 90% commercial and industrial customers. That’s been a long-standing focus because we think those are the customers that we pair up best in the composition of our assets. The platform is going to be able to sell more products to all of these customers, products like our highly successful hourly CFE product,” he added. While Constellation has been a leader in the nuclear industry with excellent performance numbers, Dominguez said Calpine’s gas assets have also demonstrated high availability and capacity factors. “Like us, Calpine has been developing sustainability for products for their customers, lending natural gas power with renewable power to create a pathway for sustainability that has been a great product,” he said. As Dominguez explained to investors, the combined company’s most prominent opportunity lies in demand growth projections. “We’re going to create this largest, cleanest, reliable generation at a time when these megawatts are being recognized as premium products because they’re needed to meet the growing demand for energy for our customers,” he said. “The fact of the matter is, demand for our products is expected to grow at levels we haven’t seen in a lifetime.” Demand growth within the Electric Reliability Council of Texas (ERCOT) and PJM Interconnection pose an especially lucrative prospect, he suggested. “Now listen, I get it: We can all raise questions about the ultimate magnitude of these increases. Do we believe all of it’s real? It’s hard to say, really, but let me offer a couple of thoughts here. First, even if only half or a third of this forecasted growth occurs, it’s a very big deal, and the combined company assets will be very well positioned.” A slide from Constellation’s presentation outlining its proposed acquisition of Calpine highlights load growth projections in ERCOT and PJM. “These will be the two largest markets for the pro-forma company,” Dominguez said on Friday. Earlier this year, ERCOT unveiled a “New Era of Planning” that it said was necessary given that it estimated an additional 40 GW of load growth by 2030 (over the next five years) compared to last year’s forecast. PJM forecasts a 40 GW demand increase over the next 15 years due to electrification and large new loads, such as data centers. Courtesy: Constellation “Second, what’s more compelling to me than the ultimate amount of projected growth—which is, again, something we could always debate—is that we’re seeing year-over-year increases to the annual forecasts. And you see those forecasts in the solid line on this slide. It’s not forecast we’re seeing, we’re seeing a lot of activity on the ground,” said Dominguez. That growth is being driven by large part by data centers, digitalization, and electrification. “The demand is real, and the demand for reliable power assets that can operate at high capacity factors is growing even more dramatically because of the composition of the demand,” he said. The demand is not just for peaking power, but—especially for data centers—it is for “24/7 energy” resources, he said. “Now, in contrast to the 24/7 demand we’re seeing, the reality is the megawatts that we’re adding to the system, those megawatts that are in the queue are primarily intermittent resources and short duration battery storage. There’s just very limited dispatchable generation planned to be added in PJM, ERCOT, and California.” Echoing the North American Electric Reliability Corp. (NERC) and several regional transmission organizations (RTOs), Dominguez noted that while renewables are slated to play an “enormous role,” their variability poses reliability implications seasonally and day-to-day. “Independent studies from independent system operators (ISOs) and even some environmental NGOs all agree on the continued need for natural gas-fired generation,” he said. “Reliability is equally important as sustainability, and we just have to solve for both—just don’t have a choice.” A slide from Constellation’s presentation on Friday cites several independent system operator (ISO) studies that suggest virtually all existing gas generation will be needed for decades. The citations are as follows: (CA) California ISO “2024 Summer Loads and Resources Assessment” (May 2024): (TX) IdeaSmiths LLC “ERCOT 2040: A Roadmap for Modernizing Texas’ Electricity Infrastructure” (July 2023): (NE) E3 “Net-Zero New England: Ensuring Electric Reliability in a Low-Carbon Future” (Nov 2020): (PJM) Aurora “Market Report” (Oct 2024): (US) Princeton University “Net Zero America” (Oct 2021). Courtesy: Constellation. Dominguez on Friday also highlighted the combined company’s strategic coast-to-coast reach within the continental U.S. “I think what the transaction does is puts us in the customer conversation in every single region of the country that’s competitive, and that’s exciting because what it does is it transitions relationships with customers from transactional to truly strategic, where we can serve in multiple markets and give them multiple options,” he said. In addition, he noted, it creates substantial market diversification. “It moderates our reliance on PJM and it expands our presence in Texas—the fastest growing power demand market—and in California, where we’ve been growing a customer business for the last couple of decades.” While Constellation has been working to grow its generation business in Texas, “we couldn’t do it fast enough,” he noted. “Through this combination, our owners will have better upside exposure to growth in Texas.” In a statement on Friday, Andrew Novotny, president and CEO of Calpine, also lauded the companies’ complementary attributes, including shared goals to supercharge investment in emerging technologies, including carbon capture and new nuclear. “This is an incredible opportunity to bring together top-tier generation fleets, leading retail customer businesses, and the best people in our industry to help drive a stronger American economy for a cleaner, healthier, and more sustainable future,” he said. “Together, we will be better positioned to bring accelerated investment in everything from zero-emission nuclear to battery storage that will power our economy in a way that puts people and our environment first.” —Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).

powerplant

Jan 10, 2025

articles found