Chapter 14

Calpine, United States

Summary of approach to projects^1

This case study, unlike other case studies in this book, examines a single company engaged
in various projects in the power industry. Calpine is a leading independent power producer
(IPP) engaged in the development, acquisition, ownership and operation of power generation
facilities, and the sale of electricity, predominantly in the United States. Calpine has used a
wide variety of methods to finance its growth, including equity offerings, traditional bank

Type of project

Power plant portfolio.

Country

United States.

Distinctive features of company’s approach

• Rapid growth through acquisition and new power plant development.


• First open-ended revolving-credit project finance construction facility for a portfo-
  lio of greenfield merchant plants.


• Scaling back of growth plans and capital expenditures in response to difficult mar-
  ket conditions; survival threatened by heavy debt load.

Description of financing for some of its projects

• The first merchant power plant financing in the United States was launched in 1996.
  It consisted of equity-guaranteed debt (replaced by sponsor’s equity when con-
  struction was completed) and ordinary senior debt.


• The first mini-perm power plant financing, in 1998, included a two-year construc-
  tion loan and a five-year term loan.


• Leverage leases financed the purchase of 15 geothermal power plants in 1999.


• An open-ended revolving-credit project finance construction facility financed a
  portfolio of greenfield merchant plants in 1999, as well as the advance purchase of
  turbines in 2000.