Developer still interested in purchasing Concord Steam

  • The Chicago-based company that once wanted to buy Concord Steam to keep it running says it is still interested in a potential purchase. Monitor file

Monitor staff
Published: 3/4/2017 11:35:37 PM

Even as the state Senate prepares to discuss whether to spend $25 million to shift the State House and other government buildings away from steam heat, the company that once wanted to buy Concord Steam to keep it running says it is still interested.

“We need more information because we’ve been out of the loop … but it appears to me, based on the numbers that we’ve run, that there still very much could be an interesting solution here that’s worth exploring. If the stars aligned, absolutely we’d do it,” said Aaron Walters, a managing partner at GreenCity Power.

The firm is a Chicago-based developer and operator of cogeneration power projects – those that produce both heat and electricity for sale.

Walters was in Concord last week on other business and spoke with State Rep. Lee Oxenham, a Plainfield Democrat, and State Sen. Martha Fuller Clark, a Portsmouth Democrat, about Concord Steam.

No formal proposals have been put forward, but the matter may come up Wednesday during a hearing on HB 368, which would authorize spending up to $25 million for switching state-owned buildings in the Gallen state office park and in downtown Concord away from Concord Steam. The hearing starts at 3 p.m. before the Senate’s Capital Budget Committee.

GreenCity Power says it has been involved in more than 300 megawatts of cogeneration projects across North America, Europe and Asia involving $350 million of capital. The company gained attention in the area a year ago, as the Public Utilities Commission and state and city officials were struggling to find a future for Concord Steam, which was facing financial and technical problems.

In March 2016, Walters and partner Tom O’Brien said they were interested in buying the failing utility and investing some $20 million to keep it going. But the offer faded without any formal hearings after questions were raised about costs that the state would have to pay in a long-term contract – questions that Walters says were based on inaccurate comparisons of steam heat vs. gas-fired heat – and, Walters says, nobody responded.

“At pretty much every turn, no one was interested in meeting with us,” he said.

The state later approved a deal under which Liberty Utilities bought Concord Steam’s customer list and some easements, but not the power plant or pipe network, for $1.9 million.

The power plant on Industrial Drive will close after May 31, a deadline that has Concord customers in more than 100 buildings scrambling to find, pay for and install different heating systems.

Those customers include many downtown businesses and nonprofits as well as four Concord schools and some city buildings as well as the state government, which uses Concord Steam for some buildings in the Gallen complex and for several historic downtown buildings including the state library and the State House.

Steve Duprey, one of the city’s biggest property owners, has converted two of his commercial buildings to gas and is taking quotes to convert the others, including Eagle Square.

He says the idea of saving Concord Steam may seem more appealing than it did a year ago because the cost of conversion to gas is proving higher than earlier estimates.

“$25 million for the state – really?” Duprey said in a telephone interview Thursday.

The Concord school system estimates that it will cost $9 million to convert the four schools still on steam heat, and the city’s capital budget includes funds for converting City Hall. Installing new boilers and converting internal systems can cost large buildings hundreds of thousands of dollars, and some 180 buildings have used Concord Steam.

The cost for the state government on what is known as the downtown loop – a circuit of heating pipes that serves the State House and some adjoining buildings – is particularly high because their historic nature means steam heat will be maintained with a newly built system nearby.

“If you put all those numbers together it’s close to $50 million. You might be able to get a long-term, low-interest loan, someone might be able to make this happen,” Duprey said.

But he noted that with the system set to shut down in less than three months, speed is of the essence: “Boy, we’d have to hear something real interesting, real fast.”

In some cases the cost of conversion could be recovered in just a few years because heating costs under natural gas are likely to be much less than the cost under Concord Steam.

There are a number of formidable obstacles to GreenCity Power being able to operate Concord Steam in some form.

For one, the PUC has already approved the sale of Concord Steam’s easements and customer list to Liberty Utilities, and GreenCity Power might need to buy those to operate.

Further, since last summer’s announcement of the sale, many remaining customers have switched to gas heat or committed to switching, worsening the shrinking customer base that was the root cause of Concord Steam’s demise. It’s not clear that there are enough customers left to support a business.

Also, Concord Steam’s underground pipe network needs work – as much as 50 percent of the steam leaks out of them before getting to customers – and the power plant has struggled with safety issues, which would require large amounts of investment, thus raising prices to customers and further dampening demand.

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

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