Reported ---
The Puerto Rico Energy Bureau (PREB) has greenlighted Genera PR’s request to utilize natural gas as the main fuel for the Palo Seco power plant, cautioning that any enhancements to facilitate the fuel transition will be the responsibility of the Puerto Rico Electric Power Authority (PREPA).
This approval occurs amidst concerns from civic organizations regarding the growing reliance on natural gas for plant operations instead of focusing more on expanding rooftop solar energy systems.
Genera PR, a division of New Fortress Energy, which specializes in liquefied natural gas (LNG) and energy facilities, submitted its request on February 21 of this year to operate both the Palo Seco MP (MobilePac) and Mayagüez CT with natural gas. However, the PREB indicated that it will address the Mayagüez facility at a later time.
“Although both projects share similarities, each comes with its own distinct hurdles,” stated the PREB.
Genera’s appeal to the PREB involved transitioning the primary fuel for electricity generation at three MobilePac-type combustion turbines located at Palo Seco from ultra-low sulfur diesel (ULSD) to LNG, while permitting ULSD to remain as a backup option. Genera estimates that running the Palo Seco MPs on natural gas could generate savings of around $12 million each year, assuming an increase in the capacity factor from 17% to 33%.
The Palo Seco MPs consist of three dual-fuel-capable 27-megawatt combustion turbines that commenced commercial operations in October 2019. These turbines operate primarily as peaking resources, with annual capacity factors near 17%. Genera indicates that environmental permits restrict the capacity factor for the Palo Seco MPs to roughly one third.
Genera asserted that introducing the proposed fuel modification would not necessitate additional capital expenditures, thereby lacking any impact on the base rate. Furthermore, the procurement of LNG, supplied by tank, would follow a competitive process managed by the Public-Private Partnerships Authority along with its appointed third-party procurement officer.
“Considering the discussed points, the Energy Bureau concludes that the proposed fuel transition for the Palo Seco MPs aligns with the Approved (Integrated Resource Plan),” mentioned the PREB.
However, the regulatory body clarified that ownership of the improvements related to the fuel transition at the Palo Seco MPs will rest with PREPA, not Genera. They also pointed out that a clause in the contract with Genera requiring dual-fuel capability for new or existing units does not apply to PREPA’s legacy generation facilities.
“The law stipulates that if any legacy asset is sold during a PREPA transaction, it must be modified for dual-fuel utilization according to legal stipulations. However, we stress that this requirement does not pertain to units retained by PREPA to be operated by a private firm under a contract like the Generation OMA,” explained the PREB. “Nonetheless, the legal framework does not prevent existing units classified as part of PREPA’s Generation Legacy Assets from being upgraded for dual-fuel functionality.”
