The Long Island Power Authority (LIPA) Board of Trustees voted Oct. 25 to authorize staff to begin negotiating potential power purchase agreements (PPA) for new generating resources consistent with LIPA’s Electric Resource Energy Plan.
The trustees also authorized actions related to diversifying LIPA’s resource portfolio, including efforts and investments to improve energy efficiency through the Efficiency Long Island Program, its renewable energy programs, future renewables procurements, and other actions and investments targeting up to a minimum of an additional 400 MW by 2018 resulting in a total of over 700 MW installed.
LIPA Chairman Howard Steinberg said in an Oct. 25 statement: “The action today to support the addition of new, clean and more efficient natural gas, base-load generation, coupled with an aggressive renewable energy program and continued support for our $924 million 10-year energy efficiency program, positions LIPA to diversify its energy portfolio and begin the transition to a cleaner, more reliable, and reasonably priced electric system on Long Island.”
“Today’s action by the LIPA Board is a giant step forward toward securing our energy future,” said LIPA COO Michael Hervey. “While LIPA has consistently supplied safe and reliable energy to our customers over the last decade, the fact is that peak demand continues to grow on Long Island. This comprehensive energy plan will ensure that we will be able to meet our future energy needs using a diverse mix of energy resources and efficiency measures that are reliable, economic, and environmentally friendly.”
In 2010, LIPA issued a request for proposals (RFP) seeking new and/or repowered resources to help meet Long Island’s growing energy demand and the requirements of the New York State Reliability Council and New York ISO. LIPA received 45 proposals from 16 entities as of March 2011, reflecting a variety of technologies and project sizes.
Two gas-fired projects picked for negotiations
Following a comprehensive analysis, it was determined that the projects proposed by J-Power USA Development Co. Inc. at the Shoreham site and by Caithness Long Island II LLC in Yaphank were the highest ranked proposals. LIPA Trustees decided to conduct negotiations with each developer to ultimately determine which project would be able to receive needed regulatory approvals and permits in a timely fashion and provide the best value to LIPA customers.
“The selection of new generation resources has the potential to create 700 to 1300 highly-skilled construction and trades jobs on Long Island and up to 30 permanent jobs during operation, further helping the region recover from the most severe economic downturn since the Great Depression. This coupled with significant expansion of LIPA’s renewable energy program and continued investment in energy efficiency will add thousands of new jobs to the region and improve our environment,” said Paul DeCotis, LIPA’s Vice President of Power Markets. “The addition of new base-load resources will also provide the opportunity and resources necessary to repower the Port Jefferson steam plant, which must be removed from service prior to repowering. Securing new additional generation now will further support this effort and reduce customer costs over what they might otherwise have been.”
The selected projects are:
- Caithness (a wholly owned subsidiary of Caithness Energy LLC) proposes to develop, operate, and own a new 706-MW, natural gas-fired, combined cycle power plant in Yaphank in the Town of Brookhaven on the same site as its existing 326-MW combined-cycle plant. Caithness proposes to sell the entire output of the proposed project to LIPA under a 20-year PPA following its proposed May 1, 2017, commercial operation date (COD). Natural gas for the plant would be delivered using either the existing National Grid gas system or through a new gas pipeline being proposed by Northville Industries.
- J-Power (an indirect wholly-owned subsidiary of Electric Power Development Co. Ltd.) proposes to develop, operate, and own a new 377-MW, natural gas-fired, combined cycle plant in Shoreham in the Town of Brookhaven on a site owned by LIPA. J-Power proposes to use the latest Mitsubishi 501G combined cycle technology designed for maximum efficiency. J-Power proposes to sell the entire output of the project to LIPA under a 20-year PPA following its proposed for May 1, 2017, COD. Natural gas would be delivered using either a new marine pipeline extension proposed by Iroquois Gas Transmission or through a new gas pipeline being proposed by Northville Industries.
Before any selected project could commence construction, a full environmental review must be completed by the developer, LIPA noted. Also, LIPA’s Board of Trustees may be required to adopt all environmental findings produced prior to authorizing the execution of any resulting PPA. The agreement would also be subject to review and approval of the New York State Attorney General and the New York State Comptroller.
Power needs above these projects to be met in different ways
While neither project selected will fully meet LIPA’s future energy needs on its own, LIPA said it envisions that this gap will be made up through a combination of energy efficiency, clean technologies, and renewable projects such as solar, wind, and fuel cells. In furtherance of implementing its electric resource plan, LIPA will expand its successful solar rebate and feed-in (FIT) tariff and issue a new competitive solicitation for renewable energy on Long Island. These actions are consistent with the recommendations of Gov. Andrew Cuomo’s Energy Highway Taskforce. Specifically, LIPA will:
- Immediately modify the Solar Pioneer program to provide rebates to residential customers who lease qualifying solar PV systems.
- Commit to issuing an additional 100 MW of renewable energy capacity, no later than July, 1, 2013, under the Clean Solar Initiative feed-in-tariff (FIT).
- Commit to modifying LIPA’s tariff, no later than July 1, 2013, to allow wind, fuel cells and “other” renewable resources to compete for an additional 20 MW block of capacity.
- Commit to issuing a competitive procurement for additional renewable energy supply, including offshore wind, for up to 280 MW of capacity by 2018. This procurement, combined with the expansion of the FIT. would bring an extra 400 MW on-line by 2018.
- Along with the New York Power Authority and Con Edison, LIPA would continue to seek private and federal funds where feasible for the LI-NYC Offshore Wind Project which could produce 350 MW-700 MW and is in the lease application stage with The Bureau of Energy Ocean Management.
- In addition, LIPA will initiate a process involving LIPA staff, renewable and energy efficiency industry experts, and environmental and consumer interest groups to expand LIPA’s use of renewable resources and efficiency programs beyond 2018 to ensure that LIPA is adding renewable energy capacity at a level comparable to the rest of the state.