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Ohio plant developer eyes hybrid capacity approach

July 22, 2013

The developer of the 800-MW Oregon Clean Energy natural gas-fired plant near Toledo, Ohio, is considering a "hybrid" approach under which some capacity would be committed under bilateral agreements with the remainder sold into the PJM Interconnection's capacity auction next May.

Oregon Clean Energy is among several gas plants proposed by independent power developers and electric utilities in Ohio and Indiana, Midwestern states where older coal-fired units representing several thousand megawatts of capacity either have been shuttered or will be retired in the next few years to comply with new Environmental Protection Agency rules.

Of those gas projects, Oregon Clean Energy is regarded by some experts as perhaps having the best chance of actually getting built. The project is named for a small community near Toledo in northwestern Ohio's Lucas County.

North America Project Development LLC, co-owned by veteran US energy industry executives William Martin and William Siderewicz, won approval for the approximately $860 million project on May 1 from the Ohio Power Siting Board and has received a "non-appealable" final air permit from the Ohio Environmental Protection Agency.

"That's the big one," OEPA spokeswoman Dina Pierce said Friday. "It actually allows them to build the facility."

In a Friday interview, Martin said he is negotiating "a couple of bilateral agreements on capacity" with two of the several "credit-worthy" firms that submitted proposals to North America. Martin said he is "comfortable" in finding outlets for all of Oregon Clean Energy's capacity and energy. He has declined to identify the would-be buyers except to say they are "among the group of entities you would anticipate that would want to buy energy from us, and are participants in PJM."

If North America "has any capacity left," once those deals are done, "we may enter the May 2014 PJM auction," he said, although "we probably won't know until after the new year about taking part in the PJM auction."

Martin observed that "energy agreements and capacity agreements are different. On the energy side, it's a matter of which one of the proposals is more economic at the time we decide to strike. On the capacity side, it's a question of whether bilateral agreements are for enough capacity for a length of time to interest us. If not, we may enter into a hybrid arrangement. We may enter into agreements on capacity on a bilateral basis and enter the auction for the remainder."

While the discussions with potential customers are continuing, Martin conceded no one is in a big hurry to finish them. "Everybody is trying to determine where the real pricing is, what the length of time is" when Oregon Clean Energy's output will be in highest demand.

As a combined-cycle facility, the plant will be capable of operating around the clock on a baseload basis.

At one time, Martin hoped to get the plant under construction before the end of 2013. That is no longer the plan, though.

"Absolutely no chance of getting under construction this year," he confirmed. Now, construction is targeted to start next spring, with the plant up and running in 2017.

During Martin's lengthy career, he has developed a number of power projects. Nearly a decade ago, he co-developed the 700-MW Fremont Energy Center gas plant in Ohio with Calpine. In 2008, Fremont was sold to Akron, Ohio-based FirstEnergy. Then, in 2011, American Municipal Power acquired the plant, which began commercial operation in February 2012.

After forming CME International in 1992, Martin was the lead developer of the first independent power project in North Africa, partnering with Caterpillar Corp.

Over the next few months, Oregon Clean Energy will be the focus of a PJM facility study, he said. FirstEnergy, in whose service territory the plant is located, "has been very cooperative on technical issues," he said.