Calpine

Independent Power Generation Using Natural Gas and Geothermal Energy

Calpine enjoys a unique status as an electric power producer. With 2350 employees, it’s not large by most Fortune 500 standards. But it occupies a big niche as the leading independent power producer in the country.

As part of being independent, Calpine has shown a bent for providing clean, fuel-efficient electricity, focusing on natural gas-fired and geothermal power generation. You might call this an odd mix, but it evolves from a simple strategy. As Bob Fishman, executive vice president, power operations, says, “If a technology comes along that is cost effective and meets our environmental criteria, we’ll look at it.”

With headquarters in San Jose, California, Calpine has other offices and plants around the country. They have 88 power plants in operation generating a total of 26,000 megawatts. The fleet consists of 69 gas-fired plants generating over 25,000 megawatts and 19 geothermal plants producing 725 megawatts.

These numbers show that gas-fired power plants serve as Calpine’s bread and butter. With plants in 17 states and Calgary, Alberta, Canada, it ranks as the largest fleet of natural gas-fired power plants in North America. They have enough capacity to meet the needs of nearly 26 million households, or approximately 3.5 percent of the electricity consumed in the United States. “The two states that stand out in terms of having a fair market and the right fundamentals of the generation mix are Texas and California, and that’s where we make most of our money,” Fishman reveals. The two states account for 70 percent of their generation and 90 percent of revenue.

Why natural gas? Fishman rattles off a litany of reasons. “Our plants are about 25 to 30 percent more efficient than a new coal plant and 30 or 35 percent more efficient than older oil and gas plants. We produce less than half the carbon dioxide compared to a coal plant. We produce 93 percent less nitrogen oxide, more than 99 percent less sulfur dioxide, no mercury, and 92 percent less particulate matter than a conventional coal plant.” He adds, “Economically, it depends on where the gas price is compared with the price of coal. Generally, we’re a little more expensive than coal.”

But there’s more to the equation, as Fishman explains. “On the other hand, we have a lot more flexibility in that our plants can follow the load a lot better. Our power plants can start up every morning, catch the peak load during the day, and then throttle back or shut down at night. You can’t do that with a coal plant. A coal plant has to stay up; there’s too much thermal inertia for it to go up and down like that. Our plants are better able to respond to the dynamics of the national electrical grid.”

Adding to the environmental benefits, about 30 percent of Calpine’s fleet of gas-fired plants and two thirds of those in Texas take the form of cogeneration plants, which use a combined cycle. Gas turbines run like big jet engines that turn generators and generate exhaust heat in the process. The heat can be used to produce high-pressure steam to turn a steam turbine and make more electricity, or the steam can be used in an industrial process. Plants that do the latter use energy 10 to 15 percent more efficiently. Refineries and chemical plants often do this.

Started Small
Peter Cartwright, a civil engineering graduate from Princeton who majored in geological engineering, started Calpine in 1984 to participate in the emerging independent power industry. Four other people soon joined him. As a young engineer, Cartwright had an interest in oil and gas exploration and considered it important for the United States to develop indigenous sources of natural gas.

Until 1978, all power was typically generated by public utilities (some large factories or other industrial facilities such as refineries generated their own power). Spurred by the energy crisis of the 1970s, the Public Utilities Regulatory Policy Act came into effect, allowing independent generators to sell power back to the utilities if they met certain efficiency criteria.

But under the 1978 law, the opportunities for independent generators to sell power to utilities were limited. Implementing the law in 50 states proved difficult, as each state enacted its own rules on how the market would work. Some states such as California, Texas, and Massachusetts were progressive in creating a free market with mechanisms for trading and selling power as a commodity. Other states, especially those in the southeast, largely ignored it, mostly because of the political influence utilities had in those states. “The market was unevenly applied, and so it’s no accident that Calpine was relatively strong in those states where the market was open to us,” Fishman says.

In the early 1990s, another law was passed that began the deregulation of the utility industry in a broader sense. The later law allowed more opportunity for them to compete to sell electricity, and the concept of the wholesale generator took root.

As the net result, Fishman explains, “We supply power to the utilities in competition with other power producers or utilities. The difference of an independent power producer largely is that we operate on the wholesale level. The utilities still distribute the power at the retail level, though some power distributors do try to get into retail and pay a fee to the utilities for delivering the power to the end user.” Calpine sells power to public and municipal utilities, and they have power plants at refineries and other industrial customers, where they sell directly to them.

Letting off Steam
Calpine’s geothermal offerings come by way of The Geysers, located about 100 miles northeast of San Francisco, California. They operate 19 geothermal power plants there, generating nearly 40 percent of the geothermal energy in the United States, making Calpine the largest producer of geothermal energy in North America. Occupying 30 square miles, The Geysers comprises the largest complex of geothermal power plants in the world. The power is available to consumers throughout California and accounts for nearly 70 percent of the power needs from the Golden Gate Bridge to the Oregon border.

Because these plants do not burn fossil fuel, they have an inherent environmental advantage. Calpine captures steam in the geothermal reservoir and pipes it to generating units. The steam spins a turbine that drives a generator to produce electricity. Molten rock, or magma, exists deep in the earth where temperatures are extremely high. However, magma extends relatively close to the surface in a few areas, particularly the volcanically active areas around the Pacific Rim. At The Geysers, the magma is believed to exist four miles below the earth’s surface. The heat from the magma radiates to the layers of rock above, heating water in the pores and fractures of the hot rock. The reservoir water boils to steam and is trapped by an overlying layer of tight, unfractured cap rock.

Wells, some more than two miles deep, are drilled through the cap rock to tap the natural steam. After passing through the turbine, spent steam goes through a condenser where it is cooled and turns back into water. Calpine recycles about 25 percent of the water back into the steam reservoir with the remainder lost to evaporation.

Strong Demand for Engineers
To handle its diverse engineering needs, Calpine has a central engineering group in Folsom, California that reports to Fishman, and they have engineers at every plant. Several hundred engineers populate the company. Regional engineers deal in day-to-day matters. Every plant has at least one plant engineer who handles engineering problems and serves as site safety coordinator. The Turbine Maintenance Group near Houston has mostly MEs specializing in gas and steam turbines. They also have an engineering group dedicated to the Geysers. When Calpine builds a new plant, the central engineering group does the preliminary engineering, and then they hire A&E firms to flesh out the details.

Fishman manages Calpine’s portfolio of natural gas-fired and geothermal power plants and also has responsibility for engineering, safety, health, and environmental programs as well as fuel diversification activities. A former chief engineer in the U.S. Navy, he has a bachelor’s degree from the U.S. Naval Academy, a master’s degree from MIT, and a Ph.D. in from the University of Maryland, all in mechanical engineering.

Although Calpine has endured a recent bankruptcy, Fishman sees good things ahead for the company. “We have a detailed efficiency improvement and reliability improvement initiative. I want to cut forced outages in half. I think we can pick up a couple of percent of efficiency improvement; keep in mind that one percent efficiency improvement in this fleet is 50 million dollars a year. It doesn’t take a lot to move the needle up with a company this big.” He notes that the central engineering group is the program manager for the initiatives.

He sees the same outlook for geothermal energy. “I would like to see us double our geothermal capability in five years, which would be huge.” Presently, this technology is practical in only a few parts of the world. You can get to steam anywhere, but you have to find places where it’s shallow enough that you can cost-effectively reach it. Calpine is looking at an area in northern California called Glass Mountain, probably the largest undeveloped geothermal field in North America and one that could provide another 400 to 500 megawatts. This should only add to Calpine’s niche as an independent power producer with a unique mix of environmentally friendly energy sources.

Snapshot

Company:
Calpine Corporation

Type:
Independent electric power producer

Location:
Headquarters in San Jose, California. Power plants and other offices and facilities in states throughout the country.

Website:
www.calpine.com

Types of engineers they use:
Primarily mechanical and electrical types, with EEs often handling instrumentation and controls. They also have a few civils and structural engineers.

Outlook for hiring engineers:
According to Bob Fishman, executive vice president, power operations, “In our budget, not counting any replacement, we’re going to increase our engineering head count this year by 15 or 16.” Many will be in the company’s Turbine Maintenance Group and some in central engineering. “Efforts to improve efficiency are driving the need for engineers.” They see a need mostly for more mechanical, electrical, and controls engineers in Texas and California.

Kathy Staudt, director of talent acquisition, adds, “The energy markets are booming.” When it comes to hiring, “We look at almost anyone who has the discipline and experience we need. We’re always in the marketplace looking for engineers. It’s tight. You have a supply and demand problem.” Fishman echoes the shortage: “They’re not graduating enough engineers. It would be a good time to be a 25-year-old mechanical engineer.”

What they look for in engineers:
“That three-to-five-year person is ideal,” says Staudt. Fishman adds that 10 to 15 years of experience is desirable too. An engineer must be willing to travel. “You never know where you’ll be needed. It could be in the field or at the plant,” Fishman says.

Contact information for submitting resumes:
Send resumes to Kathy Staudt by e-mail at staudtk@calpine.com