Kentucky PSC okays 2-MW, gas-fired project for Owen Electric Cooperative

The Kentucky Public Service Commission on Oct. 30 approved a June 26 application from Owen Electric Cooperative for a Certificate of Public Convenience and Necessity to construct an approximately 2-MW, gas-fired distributed generation facility in Owen County, Kentucky.

Owen Electric is a distribution cooperative which purchases power from East Kentucky Power Cooperative (EKPC) for resale and serves approximately 59,000 members. The proposed Harshaw Trane DG Facility is a 1,988-kW, natural gas-fueled generator. Owen Electric states that the proposed DG Facility is necessary, will not result in wasteful duplication, and will result in substantial cost savings for its members. Owen Electric also states that the energy generated from the proposed project will displace nearly 2 MW of higher-cost energy that Owen Electric currently purchases from EKPC.

Owen Electric estimates the cost savings realized by its members from the DG Facility will be approximately $9.4 million over the next 20 years and has a net present value of $3.29 million.

Owen Electric proposes to locate the DG Facility on property it owns at its headquarters. The three-phase synchronous-distributed generator will be powered through a continuous-duty natural gas-fueled reciprocating engine. The load-following generator will tie to the EKPC Bromley substation through a one-mile, 12.5/7.2-kV overhead three-phase feeder circuit. EKPC will provide an additional feeder bay with over-current protection within the Bromley substation.

The generator will synchronize to system voltage and frequency, link to Owen Electric’s Supervisory Control and Data System (SCADA), and will generate the native load power required at the Bromley substation. At no time will the generator produce more power than can be used by the native load on the Bromley substation; therefore, there will be no net-metering at the substation.

If more power than can be supplied by the DG is demanded at the Bromley substation, Owen Electric will rely on EKPC to supply the additional energy. Owen Electric estimates the capacity factor of the generator to be 85.5% percent capable of producing 14,889,000 kWh annually. Because there is an existing natural gas pipeline located near Owen Electric’s headquarters, a pipeline extension to the proposed DG Facility would not be needed.

Owen Electric plans to finance the proposed construction with general operating funds. The estimated capital cost of the facility is $2.6 million. The natural gas required to fuel the generator will be furnished under a firm contract with Carrolton Utilities, which in turn receives gas supply from Texas Gas Transmission. The generator is projected to burn 120,869 MMBtu of natural gas annually at a cost in 2016 of $527,835, which Owen projects to increase annually based on NYMEX Henry Hub Futures prices.

As part of its evaluation in determining the least-cost reasonable solution for reducing electric service costs, Owen Electric issued a Request for Proposals for a turnkey 2-MW, gas-fired distributed generator. Owen Electric received eight responses from four vendors. In addition to the proposed Harshaw Trane DG Facility, Owen Electric received: a bids from Wellhead Energy for a 1,966-kW distributed generator at $1.985 million; three bids from Fagen Inc. for distributed generators with capacities of 2,485 kW, 1,988 kW, and 1,894 kW at a total cost of $2.648 million, $2.438 million, and $2.433 million, respectively; and three bids from Power Secure with capacities of 2,055 kW, 2,055 kW, and 1,151 kW at a total cost of $2.229 million, $1.361 million, and $1.370 million, respectively.

Owen Electric evaluated the responses and ultimately selected Harshaw Trane based upon its base of knowledge and experience of distributed generation systems, the low heat rate of Harshaw Trane’s DG equipment, the low expected operation and maintenance costs, and the projected 5.4-year payback period, which was the shortest payback period of all of the bids received.

Owen Electric will purchase the turn-key system from Harshaw Trane and estimates a six-month timeframe to have the DG Facility online once it receives commission approval. All major maintenance will be contracted to Whayne Power. Owen Electric has applied for and received a permit from the Kentucky Division of Air Quality. It further provided a System Impact Study which found no adverse effects on Owen Electric’s distribution system.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.