Coal-fired Merrimack Station in Bow wins another year of funding

The coal-fired power plant in Bow has won another year’s funding from a program designed to guarantee future electricity supplies.

The two units at Merrimack Station, soon to be the last coal-fired plant in New England, will be paid about $1.08 million per month from mid-2024 to mid-2025 in return for promising to produce up to 438 megawatts of electricity whenever needed. The money will come out of electric bills and will be paid whether or not the units are called on to produce electricity. The plant will get paid more for any power that it generates.

Merrimack Station won the payment with its bid under what is known as the Forward Capacity Market run by ISO-New England, which oversees the six-state power grid. Virtually all wholesale power producers, from Seabrook Station to dams to gas-fired plants to wind farms, bid into the auction.

Merrimack Station has won similar payments during all previous auctions, which are held every year to cover a 12-month period three years in the future.

The news comes on the heels of the near-collapse of the Texas power grid during a record cold snap. The forward capacity auction is designed to protect New England from a similar situation by propping up power plants that would otherwise shut due to financial pressure, keeping them available to step in during peak periods such as heat waves or cold snaps.

Coal plants around the country are shutting because gas-fired and renewable electricity is much cheaper and underbids them in the power market.

The regions’ two remaining coal plants have been generating up to 5% of New England’s electricity at times this month, as snow and calm weather has limited production of solar and wind power, and natural gas has been diverted for heating. New England’s other coal plant, Bridgeport Harbor in Connecticut, is scheduled to close this July.

The news that Merrimack Station won another year’s support will be a disappointment to its opponents, who argue that the auction is a subsidy which keeps the most polluting of all types of power plants.

The 448-megawatt Merrimack Station is owned by Granite Shore Power, an investment group that bought it from Eversource in 2017. It operates mostly as a “peaker plant,” providing power only occasionally to meet peak demand.

Jim Andrews, president of Granite Shore Power, told the Monitor after last year’s capacity auction that Merrimack Station was financially viable even without the capacity payments. “Can you make a business model out of being a seasonal peaker? We believe we have and are,” he said.

The power plant is a major payer of property tax in the town of Bow.

Granite Shore Power also owns the Schiller Power plant in Portsmouth, which according to the union local shut down last summer. The three units at Schiller – two fired by coal and one by wood chips –  did not win any capacity payments for the second year in a row, although a small combustion turbine that uses kerosene did win a payment. Such turbines can turn on very quickly compared to most power plants which makes them valuable for covering unexpected shortfalls on the grid due to emergencies.

The capacity auction was the 15th held. It preliminary clearing prices ranging from $2.48 per kilowatt-month in New Hampshire, Vermont and parts of Maine to $3.98 kW-month further south. That is slightly higher than last year’s figure of $2, a change from previous years in which the auction price declined each year.

(David Brooks can be reached at 369-3313 or dbrooks@cmonitor.com or on Twitter @GraniteGeek.)