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San Juan powerplant to be supplied natural gas in a few months

By on March 15, 2019

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Gov. Rosselló lauds ‘first step’ in island’s energy transformation

SAN JUAN – Gov. Ricardo Rosselló announced Friday the beginning of construction at the Puerto Rico Ports Authority’s piers A, B and C and the conversion to natural gas of units 5 and 6 at the Central Palo Seco combined cycle plant in Cataño, San Juan. He called the development the first step in the island’s energy transformation.

The piers are being rebuilt to receive liquefied natural gas (LNG) from vessels to supply the power complex’s converted units, a move that is expected to bring electric bills down by about 1.3 cents per kilowatt-hour.

“Our [current] model is based on burning diesel that is expensive and harmful to our environment and that has had a number of limitations,” Rosselló said. “Today’s announcement will be a reality by the end of the summer…. It will bring substantial savings in energy costs–about $150 million a year [during the contract’s life] so that will be some $750 million in savings.”

The Puerto Rico Electric Power Authority launched a request for proposals (RFP) in July for the supply of fuel and the conversion of the plant units. NFEnergía’s bid was selected based on 14 “grading criteria, which included experience and capacity, approach and methodology, and price,” said the firm, which is a subsidiary of New Fortress Energy LLC. The contract is for five years, with options for Prepa to extend it for three additional five-year periods.

The contract was approved by Puerto Rico’s Energy Bureau and Financial Oversight and Management Board.

“We will also be burning fuel that is much cleaner, aspiring to reach our objective of a reduction of the carbon footprint within the next five to seven years by 50 percent,” the governor said, adding that the goal is to be powering the electric grid with 40 percent renewable energy by 2023, and using only renewable energy by 2050.

“The works that begin today are fundamental for the energy reform we have as a government project for the island that seeks to transform the energy system into a resilient one–cost-effective and environmentally friendly,” Rosselló said at a news conference held at the docks.

Regarding the conversions to LNG, the governor said the process “will begin with Unit 5 and later Unit 6” so one of the units can remain in operation. The work is expected to be completed between July and August.

“For the first time, this infrastructure project will successfully bring natural gas to the north of Puerto Rico, achieving one of the strategic objectives of the Island’s energy sector. It also provides substantial savings to our customers and reduces carbon dioxide (CO2 emissions), which impact the environment and climate change,” Prepa CEO José Ortiz Vázquez had previously said.

Ortiz reiterated Friday “that in the purchase of fuel, comparing the cost of natural gas versus diesel, some $150 million a year will be saved,” which “will have a direct impact on the monthly bill of all customers, who, at the end of the day, are the main beneficiaries of this transformation.”

NFEnergía assumed the costs related to the development of the former structure, which was demolished. It contained asbestos and lead. The new fuel-handling facility in the Port of San Juan is being constructed with multiple truck loading bays to provide LNG to the San Juan plant, as well as industrial customers and microgrids.

The founder and CEO of New Fortress, Wes Edens, said Friday that his company was “proud of bringing to Puerto Rico clean, affordable and trustworthy energy,” echoing his statement the day the agreement was announced: “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.”

Edens said the LNG vessel “basically has about seven to 10 days’ worth of supply.” Once it starts to run out, another ship would take its place, he said, explaining that the gas “will come from other liquefiers, not the U.S.; because of the Jones Act, there is not a Jones Act tanker–I don’t believe it exists. It will come from Trinidad and Tobago, Nigeria or other countries that supply natural gas.”

“We will comply with the Jones Act but it [the LNG] will come from someplace else,” Edens said.

For his part, Ports Authority Executive Director Anthony Maceira also called the development “an important step toward the conversion and diversification of the sources of production of electric energy on the island.” .

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