Dear IndianaDG Readers:
Does anyone think that it is a reasonable expectation for this project to look for a target price as follows:
"The upgrade and expansion must be able to generate electricity at a target cost to LMU of no greater than 5.5 cents/kilowatt-hour."
I would like to hear what people out there think about this RFP issued by the City of Logansport. I would like to have some discussion on this.
Laura Ann Arnold
From InsideINdianaBusiness.com Report
The city of Logansport is accepting proposals to upgrade its current power plant to use waste-to-energy technology and build an additional facility. Proposals are due in January and if implemented, the city expects the project to be complete in 2017.
November 27, 2012
News Release
LOGANSPORT, Ind. - Mayor Ted Franklin today announced the release of a Request for Proposals (RFP) that will assure long-term energy independence for Logansport and create a competitive electrical rate structure to attract new commercial and industrial development in Logansport. The RFP endorsed by the Logansport Utilities Services Board (Board) on November 27, 2012 requests proposals from private sector firms to repower the existing 38 MW power plant operated by the Logansport Municipal Utilities (LMU) and to build a new power plant in Logansport that will bring LMU's total generating capacity to 300 MW.
The RFP seeks proposals based on three key elements:
1. A public-private partnership will be used to finance the project where private sector firms pay all development and construction costs and LMU operates and purchases the facilities through a lease to purchase arrangement using electrical power sales to pay the costs. LMU and the City of Logansport will not issue bonds to finance any portion of the project.
2. The upgrade and expansion must be able to generate electricity at a target cost to LMU of no greater than 5.5 cents/kilowatt-hour.
3. The primary fuel source for the repowered power plant and the new power plant must be clean-burning refuse derived fuel (RDF) pellets. Natural gas may be used as the backup fuel.
"By using a public-private financing option, this proposal will assure Logansport can retain control over its electricity generation at a cost savings for LMU’s customers," said Mayor Franklin. "Moreover, this arrangement will enable LMU to offer low-cost electricity that will create a significant economic advantage for attracting new jobs through commercial and industrial development."
"LMU is at a crossroads. Our demand for power is going up, but new environmental regulations will make burning coal in the existing power plant too costly," said LMU Superintendent Paul Hartman. "To remain an independent local electrical utility and provide low-cost electricity means that we have to find creative solutions. Expanding our capacity by using RDF pellets to provide clean energy is a cost-effective and environmentally beneficial approach. Any proposal will have to pass rigorous environmental and community scrutiny to move forward, and we hope that as many viable proposals as possible are submitted for consideration."
"LMU has reviewed many options for generating electricity independently, and converting to RDF pellets and expanding our capacity is the most rational approach for retaining our independence and reducing costs to our customers" said LMU Electric Generating Plant Manager Greg Wengert.
"An independent team of experts reviewed previous studies and determined this approach is the best way to keep control of electricity generation and make our rates very competitive for economic development."
Proposals to upgrade and expand LMU's power generation facilities are due by January 11, 2013. If implemented, the Phase I repowering of the existing power plant would be completed no later than 2016. Construction of the new power plant would likely be completed in 2016-2017.
The City will evaluate proposals based on the responders' experience with the proposed technology, the quality of their technical proposal, and an assessment of their ability to deliver electricity at the desired purchase price level.
Economic Benefits
Two aspects of the RFP assure economic benefit for Logansport. Using the public-private partnership arrangement will allow the cost of financing the project to be provided by the private developer. LMU and the City of Logansport will not issue bonds to pay for any part of the project. Furthermore, any bidder on the project must demonstrate the ability to generate electricity at a cost in the range of 4.5 to 5.5 cents per kilowatt-hr. This will ensure LMU's electric rates are low for its current customers and will be competitive to attract new commercial and industrial development to Logansport.
Environmental Benefits
The RFP includes accepting Logansport's municipal waste stream for incorporation into the RDF pellets. This will significantly reduce the need for local landfill capacity in the future. Special consideration shall be given to proposals where production of RDF will be within the service area of LMU, thereby creating jobs within Cass County and expanding the local tax base.
"One critical way for cities to address environmental sustainability is to move away from traditional methods of landfilling waste" said Alvaro Almuina, the Project Leader for LMU’s technical study that recommended the upgrade and expansion project. "Municipal waste has incredible energy value. It simply makes sense to make use of that energy as a fuel instead of burying it in the ground. Burning RDF pellets has significantly lower emissions than burning coal."
The next steps of this process will undergo extensive community oversight and environmental reviews, including public meetings, public hearings, and permitting approvals from the Indiana Department of Environmental Management.
Waste-to-Energy Technology
"Waste-to-energy technologies represent a significant advance in sustainable power generation development in North America. Specifically, the processing of municipal solid waste (MSW) to create refuse derived fuel (RDF), a sustainable growth industry in itself, provides for community-based energy solutions using mature, reliable technology.
Throughout Canada, for example, RDF processing, marketing and utilization covers a broad spectrum of industrial, commercial and institutional applications including district energy, cement lime kiln heating, greenhouse heating and cooling, and power generation. The waste-to-energy solution represents a lower and predicable cost of energy with multiple environmental benefits as compared to burning fossil fuels." says Bill Harvey, Enwave Energy Corporation Vice President of Project Development.
Logansport Council President Charles W. Hastings noted "the recommendations of the study team represent a reasonable and practical solution for the community of Logansport."
Source: The City of Logansport