Chesapeake Utilities Corp. (NYSE: CPK) announced March 25 the groundbreaking for the new Eight Flags Energy LLC Combined Heat and Power plant, located in northeast Florida.
The groundbreaking ceremony was held march 24 in Fernandina Beach on Amelia Island in Nassau County, Florida. The event was hosted by Chesapeake, its subsidiary, Florida Public Utilities Co. (FPU), and site host Rayonier Advanced Materials Inc. (NYSE: RYAM).
Eight Flags’ CHP plant, fueled by natural gas, will be built on a site leased from Rayonier Performance Fibers LLC, a subsidiary of Rayonier Advanced Materials. The site is adjacent to a Rayonier Performance Fibers cellulose specialties plant. The CHP plant will generate steam for sale to Rayonier Performance Fibers. The CHP plant is expected to be operational in mid 2016. The projected investment by Chesapeake and its subsidiaries in constructing the CHP project and associated facilities is about $40 million.
“The Eight Flags CHP project is a significant accomplishment. Working with Rayonier, we developed a solution that will provide benefits for all parties involved that are greater than the parties could have achieved individually. FPU customers will enjoy reliable, environmentally friendly electricity in their homes and businesses and recognize significant cost savings in the coming years,” said Michael P. McMasters, President and CEO of Chesapeake Utilities. “With the additional steam generated by the new CHP plant, Rayonier Advanced Materials will gain greater operational flexibility for their production facility. Finally, Chesapeake’s stockholders benefit as we expand our energy expertise into new unregulated arenas and increase our long-term earnings capacity from projects like this CHP project.”
The CHP plant will produce approximately 20 MW of baseload power, which FPU will purchase for distribution to its electric retail customers. The Florida Public Service Commission (FPSC) has approved a Purchased Power Agreement (PPA) for a 20-year term, which is expected to generate approximately $28 million in savings to FPU’s electric customers over the life of the PPA.
The FPSC also approved the extension of an existing energy purchased power contract between FPU and Rayonier Performance Fibers. Currently, boilers at the Rayonier Performance Fibers site provide steam and generate electricity, and the company sells the excess electricity generated to FPU. The original contract has been in place and has produced savings for FPU customers for around two years. The approved extension will extend the term of the original contract for an additional 14 years, from October 2022 to September 2036, and will generate an estimated savings of $8.2 million for FPU customers over the amended contract term and align the term of this contract with that of the PPA.
“We are thrilled to be working with Rayonier Advanced Materials and to start construction on the Eight Flags CHP plant,” added Jeffry M. Householder, President of Florida Public Utilities Company. “Approximately 50 percent of Amelia Island’s electric requirements will be generated on the Island reducing line losses and risks due to a single transmission line.”
The Florida Department of Environmental Protection on Feb. 26 issued the final air construction permit for this project. The Eight Flags facility will consist of an electric/steam cogeneration system, including a nominal 21.7-MW natural gas-fueled turbine and a heat recovery steam generator (HRSG). The HRSG will have duct burners fired with natural gas for supplemental heat, in order to generate additional steam when necessary.
The Eight Flags cogen system includes one Solar Titan 250 gas turbine generator set, with a maximum heat input of 188.4 million British thermal units per hour (MMBTU/hr), based on lower heating value of natural gas (or 204.6 MMBTU/hr based on the higher heating value of natural gas). Exhaust gases pass to a 50-foot bypass stack when steam generation is not desired, or to the HRSG. Without auxiliary natural gas firing in the HRSG, it is capable of generating up to 74,163 lb/hr of steam; at its maximum auxiliary natural gas firing rate of 135.3 MMBTU/hr, the HRSG is capable of generating up to 200,000 lb/hr of steam. Additional heat is recovered from the HRSG stack gas exhaust to heat an average of 300,000 lb/hr (maximum of 449,240 lb/hr) of water to 115 to 130 degrees F. From the HRSG, exhaust gases will vent to a 65-foot stack. Equipment includes a three-cell mechanical draft cooling tower.