The Quick and Dirty: Danskammer will make 24 Million per year to sit idle and be ready as a back up power plant. This is before turning on even one turbine. We already know they will generate power, and profit will be made. That will be on top of this 24 M. Their revenue potential can be in the 100 of millions of dollars if business as planned goes their way. Yet, they may get protection from the IDA through the PILOT plan to keep Marlboroughs tax revenue at 1.1M with it going to a max 1.315M over a ten year period regardless of how much the physical plant goes up in value. We will be posting a sample letter to help narrow what we are asking the IDA to acknowledge and request they alter any PILOT program to fairly compensate our community. For those who like the details: Summary of how a power plant makes money without firing a single turbine. Some important terms to remember during our numbers tour: Installed Capacity (ICAP): The equivalent of the power generation capacity that a traditional generator can sell into the grid capacity auction based on the size of the power plant. Unforced Capacity (UCAP): The ICAP is adjusted for historic delivery performance similar is done for a traditional generator. Loss factors in as well to reflect how much power would need to be generated at a wholesale power plant to supply your facility. ICAP/UCAP Payments: Payments to a company for the rights to electricity generated by their plant. New York Independent System Operator (NYISO): The non-profit organization that operates New York State’s electricity grid, monitors grid balance and oversees auctions of bulk energy supplies. ICAP/UCAP payments are generated here. ICAP payments are granted to a company for the rights to standby power from their plant. For example, Central Hudson might buy 450 mw a month in standby power from Danskammer Energy LLC. If they sold the rights to that power at auction for 50% of this summer’s market rate they would have received $2.3MM (likely they would sell privately for the 50% to minimize any risk of auctioning for less). That is for the RIGHTS to that power, if called into service they still need to buy the actual power from Danskammer at their agreed upon cost. This is NOT pre-paid power as you might think. ICAP payment are the rights to that power if/when needed. If the plant is called into service, not only do they still receive their ICAP payment, they also profit from selling the energy they produce. ICAP prices fluctuate with the price of power and demand. Summer is the typical peak but all seasons have potential to be profitable. ICAP payments could actually result in an operational power plant sitting idle while remaining extremely profitable. Many companies appear to use ICAP as hedge for making money. A plant located in the Central Hudson service area with a 500MW nameplate capacity that were to sell their available MW at marketplace cost during the summer auction would have received almost 0.10 cents per KW hour, roughly equating to $5 million per month. If that they negotiate that power before auction for half of that it would still be $2.5MM per month. Just to be on standbye. We are told that the CCI Roseton has already made back their initial investment this past winter. Considering their capacity of 600MW, their ICAP payments alone make them tens of millions of dollars year.
Posted on: Wed, 10 Sep 2014 00:03:27 +0000
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