PALMDALE – The Palmdale City Council will consider the purchase and sale agreement of the Palmdale Hybrid Power Plant (PHPP) by and between City of Palmdale and the Summit Power Group, LLC at its next meeting on Wednesday, May 1, at the Palmdale City Council Chamber, city officials announced Thursday. (Read the purchase and sale agreement draft here)
The purchase of the project, which includes initial purchase price, development costs, development premium, 50 acres of land, transmission construction cost savings, and potentially additional acreage will bring the City of Palmdale $27.4 million dollars.
“The sale of the power plant will generate millions of dollars that will be invested back in our community,” Palmdale Mayor Jim Ledford said. “It will also create up to 600 high paying construction jobs for the project that can take up to 30 months. Once in operation, the power plant will provide up to 35 high paying jobs. Plus, the plant will infuse up to $5 million dollars annually into our local economy, through the purchase of parts, supplies and items at local restaurants and retailers. Add to that the revenues generated by property and business taxes and it will have a tremendous positive economic impact for the region.”
In October 2012, the City released a Request for Proposals (RFP) for the PHPP. “The City and its consultants met with and discussed the project with several firms that knew and understood the process of siting and building a power plant and could recognize the value of partnering with the City to complete the steps necessary to complete the PHPP,” wrote Palmdale’s Administrative Assistant Ben Lucha in a staff report on the project.
After receiving proposals in early 2013, staff began interviews with prospective partners. “After the interviews, it was clear that Summit Power Group (Summit) had the right mix of experience, knowledge of the California Energy Market, and plan for the PHPP to take the project to the next level and bring the project to fruition while providing value to the City,” wrote Lucha.
“This project adds a stabilizing element to the electrical power grid that will enable renewable power generators to produce electricity more efficiently and with enhanced reliability,” said Palmdale’s City Manager Dave Childs.
Summit Power Group LLC, a Seattle, Washington based company, develops all types of energy projects, including carbon capture projects for enhanced oil recovery, natural gas, coal, wind, solar projects and other energy-intensive industrial projects using proven technologies. Summit also works with select new technology companies in related areas. Summit has led or had significant involvement in the successful development of more than 9,250 megawatts of projects either operating, in construction or in late stage development and has over $3 billion in projects in early stage development. For more information on Summit, visit www.summitpower.com.
City staff recommends moving forward with Summit for their broad experience, familiarity with California’s market and the fact that their proposal offered the most value to the City. “Summit has worked on similar successful projects in California, across the Country, and internationally,” said Director of Public Works Mike Mischel. “Beyond their experience, they have demonstrated a firm knowledge of an ever changing market and atmosphere to make the project a success.”
According to the staff report on the project, there are “several scenarios across the State that will influence the need for the PHPP to be constructed and placed into operation in the near future.”
“A lot has happened in the energy marketplace over the past five years,” added Mischel. “Summit has the pulse of what is needed in terms of producing electricity, lowering emissions, ensuring the continued success of renewable energy sources and making it all happen in an economically viable manner.”
Some of those issues include: filling the need created by additional renewable energy sources that are unable to provide electricity consistently, particularly at night or when the wind is not blowing; the planned phasing out of “once-through” cooling plants; the State’s mandate to reduce CO2 emissions to 1990 levels; the phasing out of older coal burning power plants; the questionable future of nuclear energy in California; and increased demand for power as the economy and population increase.
According the Western Electricity Coordinating Council, the Regional Entity responsible for coordinating and promoting Bulk Electric System reliability in the Western States, major new generating capacity will be needed in Southern California in the near term. According to their predictions, major shortfalls in energy production will start in 2017, which is when the PHPP is expected to come online.
“Those who remember the ‘brown-outs’ of the late 1990s and during the energy crisis of 2000-2001 know that we don’t want to go down that road again,” Mischel said.
“Summit will update the PHPP to make it a flexible capacity plant that can best address the issues facing us, especially the need to help balance variable resources such as wind and solar,” said Mischel. “As a flexible capacity plant, it will utilize modern proven technology, consisting of highly efficient natural gas turbines with quick-start capabilities. The turbines will be able to stay online at lower operating levels when energy needs are low and ramp up the quantity of power as needed.” Palmdale is poised to become an important power producer in the Antelope Valley and the State of California. Currently in the City of Palmdale, there are 13 solar power projects under construction or in the planning stages, which will produce a total of 158 megawatts of electricity.
In addition, the City recently entered into a Power Purchase Agreement (PPA), with PsomasFMG who will install solar shade structures in the parking lots of several City facilities, selling the resulting energy to the City at a discounted rate. It is anticipated that in the first year, the City will purchase the energy for approximately $283,500, saving over $63,000. Through the life of the 20-year PPA, the City will spend approximately $7.8 million for the energy, saving approximately $1.4 million based on conservative estimates. Palmdale will also retain the rights to the Renewable Energy Credits (RECs).
The PHPP is currently designed to produce 570 megawatts of electricity, which can service approximately 600,000 homes.
(Information via press release from the City of Palmdale.)
Previous related story: EPA issues permit to Palmdale Power Plant
UPDATED 5/2/2013: The Palmdale City Council on Wednesday, May 1, unanimously approved the purchase and sale agreement of the Palmdale Hybrid Power Plant (PHPP) by and between City of Palmdale and the Summit Power Group, LLC,