Bow power plant wins funding through 2024
|Published: 02-18-2020 6:45 PM
The Merrimack Station power plant in Bow can stay open through at least mid-2024, as the coal-fired power plant has won another year’s funding from a New England program designed to guarantee future electricity supplies.
The coal-fired plant will receive roughly $676,000 for each month from June 2023 through May 2024, a total of $8.1 million, in return for promising to generate power at any time if the need arises. The plant has previously won payments to stay open through mid-2023.
That award comes as part of the capacity auction run by ISO-New England, which operates the six-state power grid. The auction, which involves electricity generators throughout the region, is designed to make sure that enough power plants will be open three years from now to meet projected demand.
The capacity payment is made regardless of whether emergency electricity is needed, and comes on top of any per-kilowatt income the power plants receive for actually generating power.
The auction results are good news for the town of Bow, which receives hefty property tax payments from Merrimack Station.
The state’s two other coal-fired plants – smaller units in Portsmouth – and an adjacent wood-burning plant did not win anything in the capacity auction. This might affect whether the future of those three, known as Schiller Station.
The 448-megawatt Merrimack Station and 150-megawatt Schiller Station are owned by Granite Shore Power, an investment group that bought them from Eversource in 2017. These days they operate mostly as “peaker plants,” providing power only occasionally to meet peak demand, usually during winter when gas-fired power plants can’t get enough fuel because natural gas is used to heat homes.
Jim Andrews, president of Granite Shore Power, said the auction was a reflection of business realities.
“It’s a competitive marketplace that all generators participate in,” he said.
“I don’t think capacity payments keep the units open. It’s collective revenue streams, collective costs streams both fixed and variable. Can you make a business model out of being a seasonal peaker? We believe we have and are,” Andrews said. “We also believe we have an important role in the grid and the market.”
Two much smaller units next to the main power plant in Bow called combustion units also failed to win payments through 2024.
A megawatt of electricity can power between 700 and 1,000 homes.
Merrimack Station is the largest coal-fired power plant left in New England that isn’t scheduled to shut – Bridgeport Harbor in Connecticut will close next year. It has been targeted for closure by activists who face court hearings for blocking trains carrying fuel to the plant and trespassing.
Activities point out that coal is by far the worst fuel for producing electricity in terms of its contribution to climate change; they had hoped that falling prices for producing power would make the plant so uneconomic that, like many other coal-fired plants in the country, it will shut.
The latest capacity payments are much smaller than in the past, a function of sharply falling prices spurred by stagnant demand, growth of low-cost renewables and a sufficient supply of power.
This year’s price was $2 per kilowatt-month, barely half the $3.80 price set in last year’s auction and far less than the $5.30 figure set three years ago.
The estimated cost of the total capacity market in 2023-2024 will be about $980 million, said ISO-NE. It will be covered by ratepayers.
The auction covered 8,978 megawatts of generation, 3,919 megawatts of demand resources and 1,059 megawatts of electricity coming in from New York and Canada. More than 600 megawatts of new resources within New England secured obligations during the auction, including 317 megawatts of renewable technologies and another 323 megawatts from demand response and energy efficiency programs, which are designed to curtail need for power instead of increasing production of power.