Increased willingness by natural gas producers to consider long-term contracts fuel a developer’s optimism about setting up the Good Spring combined-cycle plant in Pennsylvania, EmberClear (TSXV: EMB) CEO Albert Lin said in a Sept. 20 conversation with GenerationHub.
In the fourth quarter of 2011, EmberClear (TSXV: EMB) detected that natural gas providers are becoming more receptive to potential long term gas contracts for power plants. Prior to then, there were great concerns about locking in low gas prices, Lin said.
But with so much shale gas coming into the market some producers are willing to discuss 10-year natural gas contracts, Lin indicated.
EmberClear announced Sept. 19 that it had retained an engineering, procurement and construction (EPC) contractor for the 300-MW combined-cycle plant it is developing in Schuylkill County, Pa.
The cost of building the new plant will be an estimated $400m and that includes financing. Lin also notes that his firm is a plant developer, not an operator, so it plans to sell the project to another company that would actually own the plant and be responsible for its operation.
EmberClear is in talks with several parties now and by spring of 2013 hopes to have lined up both a long-term natural gas supply and a buyer for the plant, Lin said.
EmberClear had originally hoped to fuel the project with locally-mined anthracite coal – a model that’s now unrealistic given the high price commanded by such coal for steelmaking, Lin said. The anthracite would have been gasified into synthetic gas that would have fueled the power plant.
But this past spring, EmberClear announced it was going with natural gas instead. This is a good time to bring gas-fueled generation into the PJM market, Lin said.
About 31% of the power generation in Good Spring’s region of the PJM is provided by older, small coal-fired units, many of which probably won’t be retrofitted by 2015 to comply with the latest EPA regulations.
EmberClear is also hoping to develop two similar natural gas plants on its property in Pennsylvania. The projects are currently called Good Spring 2 and 3 – and are at various stages of the licensing process.
The Good Spring site is also located near major natural gas transmission lines as well as major electric transmission infrastructure, Lin said.
EmberClear is also interested in developing transportation fuels from natural gas.