Sterling Energy Group, which on Nov. 14 announced the purchase of Niagara Generation LLC and its shut power plant in New York, also applied Nov. 14 with the New York State Public Service Commission for a needed break to get the plant open again.
The application has to do with state Renewable Portfolio Standard (RPS) eligibility for this plant, which started life as a coal-fired generator but was a few years ago converted to burning wood waste and tire-derived fuel. Sterling has said the plant would burn wood waste in the future, with a little coal mixed in for operational reasons.
Niagara Generation (NiGen) is a special purpose entity that was originally formed to own and operate a 51-MW facility located in Niagara Falls, N.Y. The facility includes a circulating fluidized bed (CFB) boiler designed and constructed by Pyropower (now Foster Wheeler Pyropower) and one steam turbine. Notable is that 53 MW is often used as power rating for this facility.
In April 2007, NiGen entered into a ten-year RPS Main Tier Agreement with the New York Energy Research and Development Authority (NYSERDA) which provided that NiGen would be paid $11.99 per MWH for the renewable attributes associated with up to 180,500 MWH per year of electricity produced from renewable fuels combusted by the facility. Since the execution of the USRG RPS Agreement, wholesale prices for electricity in western New York have fallen precipitously and, as a result, the combined revenues from wholesale sales of electricity and the USRG RPS Agreement proved to be insufficient to cover USRG’s costs of operating the facility, Sterling noted.
On Feb. 7, former owner USRG informed the commission of its intention to mothball the facility effective May 9. On that date, all operation of the facility ceased and it was placed in long-term cold storage.
As of May 9, the facility had supplied a total of only 151,475 MWH of renewable energy attributes to NYSERDA. This represents only around 292 days of operation of the facility when co-fired with renewable energy at the levels contemplated in the USRG RPS Agreement. As a result of the low level of renewable attributes provided to NYSERDA under the agreement to date, as well as its decision to mothball the facility, USRG is in default under the agreement and is subject to termination of that agreement by NYSERDA.
Sterling said it is well positioned to own and operate the facility and to increase its renewable energy output. Sterling President and CEO William Harrington was formerly CEO of a subsidiary of Foster Wheeler, which also owns Pyropower. Also, Sterling has retained the services of John Castleman as a consultant. Castleman successfully supervised the reconfiguration of multiple Pyropower CFBs to run on a fuel mix of about 90% clean wood and 10% coal.
Sterling believes that the techniques used for these projects can also be used to substantially increase the clean wood component of the fuel combusted in the facility, thereby eliminating the need to combust any tire-derived fuel in the facility and further reducing the amount of coal required to be burned.
In order justify the costs of operating the facility, Sterling said it will require higher payments from NYSERDA for the facility’s historic output of renewable energy attributes than are available under the USRG RPS Agreement. Accordingly, Sterling wants to terminate the USRG RPS Agreement, then to bid the full renewable energy capability of the facility into a future RPS solicitation conducted by NYSERDA.
“Because no developer has sought to re-start a failed renewable generating facility after termination of its RPS agreement with NYSERDA in this manner, and because re-starting the Facility is unlikely to be possible if the Facility is denied eligibility to participate in a future Main Tier RPS solicitation, Sterling respectfully requests that the Commission issue a ruling finding and declaring that if the USRG RPS Agreement is terminated as provided herein, Sterling will not be barred from bidding the Facility in any future Main Tier RPS solicitation conducted by NYSERDA, except with respect to the actual MWH of renewable energy attributes that USRG provided to NYSERDA and received payment for prior to the termination of the USRG RPS Agreement,” Sterling told the commission.