Waste-to-energy plant could be model for Maryland's electric future

Energy Answers signs up customers before seeking construction loan

September 10, 2011|Jay Hancock

There is some question about whether the electricity plant planned for a vacant, brown patch on Baltimore's waterfront would be truly "green" and "renewable."

The generator built by Energy Answers would burn waste otherwise destined for the dump. It would blow carbon dioxide and other unnatural stuff into the air. Its backers say it's cleaner than a coal-burning plant and will save many acres of landfill space.

What's not debatable is that Central Maryland needs new generation plants. To reduce the state's reliance on imported electricity. To cut expensive charges for piping juice on a congested grid to Baltimore Gas & Electric customers. And to break the hold of BGE parent Constellation Energy on the local-generation supply.

The Energy Answers project took a big step a few days ago by signing a block of government electricity customers. The development might be a model for how Maryland builds future power plants. Not in its technology — trash burning will play a limited role — but in how it is paid for.

With the ability to light, heat and cool nearly 50,000 homes, it would be the biggest single electricity development in Central Maryland since Constellation's coal-fired Brandon Shores plant expanded two decades ago in Anne Arundel County. Its 160 megawatts would give it half the capacity of Gov. Martin O'Malley's famous (and, so far, unapproved) offshore windmill project.

Energy Answers is a waste- and power-management boutique based in Albany, N.Y. The company's Fairfield plant would cost more than $700 million to build, employ hundreds of construction workers for three years and take another 180 permanent employees to operate.

It would bring 90 idle acres in that area back into the economy and onto the tax rolls. FMC Corp. closed a 50-year-old pesticide plant on that site a few years ago and moved the jobs to Asia. The generation plant would take up only a portion of the tract, leaving room for other industry to move in, take advantage of nearby power and add more badly needed jobs to the city.

A few days ago, a consortium of schools, county governments and nonprofits agreed to buy about a sixth of the plant's electricity.

This is how Maryland will build power plants in coming years: with developers signing customers before starting the construction bulldozers. No bank will finance a power project unless there is guaranteed revenue. No major generator will get built without bank financing.

Before deregulation, utilities such as BGE and Pepco built needed plants and were reimbursed by ratepayers. After deregulation, however, the system became hostage to independent investors. Profit-seeking developers were supposed to build facilities at their own risk, secure financing without guaranteed customers and then lower everybody's cost by bidding prices down.

In Central Maryland, however, that never happened. It is increasingly clear that it's not going to happen. And Maryland needs generators.

It's true that conservation and the terrible economy have kept demand for electricity far below what the seers predicted. But some day, growth will resume. Plans to build a third nuclear reactor at Calvert Cliffs on the Chesapeake are dead. We'll also need eventually to eventually replace aging, polluting coal plants.

Even now, Maryland imports almost a third of its electricity from out of state, costing every BGE customer dearly in hidden "congestion" charges and other occult costs.

The Energy Answers project would lower our dependence on imports and chip away at the dominance Constellation won by gaining control of the former BGE plants through deregulation.

(Constellation's planned merger with Exelon Corp., which owns a big nuclear plant just over the Pennsylvania line, would give the combined company an even tighter stranglehold on the region. I'll be writing more about that later.)

The Fairfield development is not a sure thing. Energy Answers must sign more future electricity customers, secure sources of trash to burn and tie up other strings.

"We could be very close" on new deals, "but I can't really discuss the negotiations for energy sales," Energy Answers CEO Patrick F. Mahoney said in an interview. Construction could start next year, he said.

Electricity from the plant would not be particularly cheap. The price that Baltimore, Annapolis, and several nearby counties and school systems have agreed to pay is much more than what electricity from coal-fired plants costs. But it's much less expensive than juice from solar panels or offshore wind farms.

And thanks to a measure that O'Malley signed into law this year, the facility would count toward the state's goal of buying at least a fifth of its energy from renewable sources by 2022.

Environmentalists argue that energy obtained by burning shredded waste and emitting carbon isn't all that renewable. I'll avoid that discussion.

What's exemplary about the Energy Answers project is that it shows how to break Central Maryland's winless streak on building significant new generation. Find electricity customers. Get them to sign a power contract. Show the deal to bankers and get a construction loan.

Now it's time to expand the idea by requiring BGE and Pepco to enter into a similar arrangement. Make them buy juice from a newly built natural gas-fired plant that could be four times larger than the Energy Answers facility. Electricity from natural gas is in many ways cleaner than that from a waste-to-energy plant. Much cheaper, too.

The Public Service Commission has been sitting on proposals to enable such a deal.

"The commissioners are still working on it and will rule as soon as they can," said PSC spokeswoman Regina Davis.

What's taking them so long?

jay.hancock@baltsun.com

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