Fiscal board approves contract to convert San Juan plants to natural gas
SAN JUAN – The Financial Oversight and Management Board and the Puerto Rico Energy Bureau have given the green light to a contract with New Fortress Energy LLC for the supply of liquefied natural gas (LNG) and conversion of units 5 and 6 of the San Juan Combined Cycle Power Plant.
New Fortress Energy announced Tuesday that its local subsidiary, NFEnergía LLC, had signed the contract with the Puerto Rico Electric Power Authority (Prepa). The initial term of the contract is five years, with options for Prepa to extend for three additional five-year periods, according to a statement.
Prepa estimates that the conversion of these units from diesel to natural gas will generate an estimated $750 million in fuel-cost savings over five years and significantly reduce emissions.
While no figures were provided, Caribbean Business previously cited Prepa officials stating that Prepa will pay $20 million to $30 million for the conversion from its operational funds. Prepa also expects to pay $140 million to $150 million for the natural gas supply.
New Fortress Energy is majority-owned by a fund managed by an affiliate of Fortress Investment Group.
NFEnergía said it will supply natural gas to the powerplant from its micro fuel-handling facility in the Port of San Juan, which has been under development for more than a year. The facility is being constructed with truck loading bays to provide LNG to industrial customers and microgrids.
The unit conversions and the development of the micro fuel handling facility are expected to be complete by mid-2019.
“This is a very pivotal transaction for PREPA and Puerto Rico,” said Wes Edens, founder and CEO of New Fortress. “The conversion of San Juan Units 5 & 6 to natural gas will save hundreds of millions of dollars and accelerate the modernization of critical power infrastructure. Natural gas power is cleaner, cheaper and is the perfect complement to renewable energy. New Fortress is proud to invest in the security and sustainability of Puerto Rico’s clean and renewable energy future.”
After multiple conversion attempts over the past 10 years, Prepa launched a request for proposals in July for the supply of fuel and the conversion of the San Juan plant’s units 5 and 6. NFEnergía’s bid was selected based on 14 grading criteria, which included experience and capacity, approach and methodology, as well as price.