Energy regulator greenlights Genera to use natural gas at Palo Seco

Genera PR’s request entailed switching the primary fuel used to generate electricity at three MobilePac-type combustion turbines located at Palo Seco from ultra-low sulfur diesel (ULSD) to liquified natural gas while allowing ULSD to remain as the backup fuel, a retooling it calculated would save about $12 million per year.

By The Star Staff

The Puerto Rico Energy Bureau (PREB) has approved Genera PR’s request to operate the Palo Seco power plant with natural gas as primary fuel but warned that any improvements to the plant for the fuel swap belong to the Puerto Rico Electric Power Authority (PREPA).

The approval comes as civic groups questioned the increasing use of natural gas to run the plants instead of shifting to greater reliance on rooftop solar systems.

Genera PR, a subsidiary of New Fortress Energy -- a developer of liquefied natural gas (LNG) and energy plants -- made the request on Feb. 21 of this year to operate Palo Seco MP (MobilePac) and the Mayagüez CT with natural gas, but the PREB said it will decide on the Mayaguez plant at a later date.

“While the nature of both projects is similar, each proposal presents its own unique challenges,” the PREB said.

Genera’s request to the PREB entailed switching the primary fuel used to generate electricity at three MobilePac-type combustion turbines located at Palo Seco from ultra-low sulfur diesel (ULSD) to LNG while allowing ULSD to remain as the backup fuel. Genera calculates that operating the Palo Seco MPs on natural gas would save about $12 million per year, compared with ULSD, assuming that its capacity factor is increased from 17% to 33%.

The Palo Seco MPs are a set of three dual-fuel-capable 27-megawatt combustion turbines that began commercial operation in October 2O19. The Palo Seco MPs are run as peaking resources, with annual capacity factors of approximately 17%. According to Genera, the Palo Seco MPs are limited to a capacity factor of roughly one third by environmental permits.

Genera stated that implementing the proposed fuel change would not require incremental capital investment and would therefore not have implications for the base rate and that fuel procurement for LNG, delivered by tank, would be procured via a competitive process administered by the Public-Private Partnerships Authority and its designated third-party procurement officer.

“Based on the reasons discussed, the Energy Bureau finds that the proposed fuel swap for the Palo Seco MPs is not inconsistent with the Approved (Integrated Resource Plan),” the PREB said.

Nonetheless, the regulator made it clear that ownership of the Palo Seco MPs’ fuel swap-related improvements will belong to PREPA and not Genera. It also noted that a provision in the contract with Genera mandating dual-fuel capability for new or existing units does not extend to PREPA’s legacy generation assets.

“The law specifies that if any legacy asset is sold as part of a PREPA transaction, it must be converted for dual-fuel use in accordance with the legal requirements. However, we emphasize that this requirement does not apply to units retained by PREPA for operation by a private operator under a contract like the Generation OMA,” the PREB said. “Nevertheless, the law does not prohibit existing units that are part of PREPA’s Generation Legacy Assets from being converted for dual-fuel use.”