$275 Million Biomass Power Plant Coming to New Hampshire
PORTSMOUTH, N.H. and GREENWICH, Conn. — Green technology developer Cate Street Capital and private investment firm Starwood Energy Group Global, LLC closed financing for a $275 million wood-powered biomass power plant in Berlin, New Hampshire and will begin construction immediately.
Berlin Station, a 75 MW facility, will sell energy, capacity and Class I Renewable Energy Credits to Public Service Company of New Hampshire under a twenty-year power purchase agreement, according to officials from Greenwich-based Starwood Energy Group.
The biomass power plant will be located in downtown Berlin on the site of a former pulp mill that closed in 2006.
Officials said the project will comply with stringent emissions standards and will emit 75 percent less nitrogen oxide, 90 percent less mercury and 98 percent less sulfur dioxide than other solid fuel facilities.
The project is expected to consume about 750,000 tons of low-grade wood per year, all of which will be sourced through an environmentally responsible wood fuel procurement program to ensure carbon dioxide neutrality, according to a statement from the firm.
The project has obtained all required permits and approvals to begin construction, and is expected to generate power by late 2013, officials said.
The project will create about four hundred construction jobs and forty permanent jobs in what investment firm officials called an economically depressed area.
Additionally, the Berlin Station project will support several hundred jobs for foresters, loggers and chippers, and is estimated to inject about $25 million annually into New Hampshire’s North Country economy, officials said.
“It should be great news for the city of Berlin,” said Joe Casey, president of the N.H. Building and Construction Trades Council. “They’ll hire union subcontractors.”
Once complete, the Berlin Station is expected to be “among the largest and most
environmentally advanced biomass energy plants in the Northeast,” officials said.
The station will benefit from federal New Markets Tax Credits, a U.S. Treasury program aimed at encouraging investment in projects located in economically distressed areas of the country.
“The large allocation of New Markets Tax Credits to the project demonstrates both the scale of the project and the importance of the economic and social benefits it brings to the region,” Starwood officials said.
The project is also eligible for a Section 1603 Grant in Lieu of Investment Tax Credits and will be one of the last biomass projects to be financed under this program.
Construction debt, which will be converted to term debt, is being provided through a $200 million private placement of senior secured notes.
“The Berlin project was an interesting and complicated multi-party transaction that will provide jobs and great benefit to the community,” says Ric Abel, managing director of the Electric Finance Group for Prudential Capital Group, a private capital provider leading a consortium of lenders providing the senior secured debt.
Babcock & Wilcox Construction Co., Inc. will construct the project on a turnkey basis.
“This closing represents the culmination of more than 4 years of development work during challenging economic conditions,” said Portsmouth, N.H.-based Cate Street Capital President John Hallé. “This is not only a significant milestone for Berlin Station, but also for the state of New Hampshire, particularly Berlin and the North Country.”
The project was approved in June by the New Hampshire Public Utilities Commission with amendments to the 20-yeart contract for the Public Service of New Hampshire to buy power from the plant, according to a statement from Cate Capital.
Progress on the plant was temporarily blocked by a lawsuit in the summer, filed by six Independent Power Producers in the state Supreme Court.
The plant was allowed to move forward with a new power purchase agreement in August between the Public Service of New Hampshire and five of the independent power producers.
Power purchasing agreements with five of the six wood-burning plants are expected to cost Public Service about $20 million more than the market rate for electricity, or about $8.5 million annually.