Pembina Pipeline greenlights $4B gas power plant for data centre

Pembina Pipeline Corporation (NYSE: PBA), Morgan Stanley Infrastructure Partners, and Kineticor Asset Management have approved a final investment decision on the Greenlight Electricity Centre, a 932-megawatt gas-fired combined cycle power generation facility to be built in Sturgeon County, Alberta.

The project carries a capital cost estimate of approximately C$4 billion, or roughly C$2 billion net to Pembina. Including C$0.6 billion in interest during construction and other financing costs, total project costs are expected to reach approximately C$4.6 billion, or C$2.3 billion net to Pembina. After proceeds of C$190 million from a land sale to the data centre customer, Pembina's net investment is expected to be approximately C$2.1 billion.

Greenlight is owned by Pembina and Morgan Stanley Infrastructure Partners at 47.5 percent each, with Kineticor holding the remaining 5 percent. Approximately 85 percent of the project's cost has been secured under fixed-price agreements, including an engineering, procurement, and construction contract with a consortium of Aecon Group (TSX: ARE) and Técnicas Reunidas, and a turbine supply agreement with Siemens Energy.

The facility will supply power to a data centre customer under a long-term tolling agreement structured around capacity payments and usage-based payments. The anticipated in-service date is the second half of 2030. Once operational, the project is expected to generate annual run-rate adjusted EBITDA of approximately C$310 million, net to Pembina.

Project financing is structured with approximately 60 percent asset-level debt and 40 percent equity. Pembina's equity contributions of approximately C$1 billion are expected to begin in 2028. The facility will require approximately 150 million cubic feet of natural gas per day, for which long-term transportation capacity has been secured.

The site has a permitted generation capacity of up to 1,864 MW, leaving room for a potential expansion. All major regulatory approvals have been received, according to the company's statement.

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