Hess will build the plant with the help of a subsidy; expert says there’s little incentive to build plants without help from the state.
But while the continued decline in natural gas prices has increased demand for the energy source and prompted existing plant operators in the state to change up their fuel mix, Frank Felder, director of the Center for Energy, Economic and Environmental Policy at the Rutgers University Edward J. Bloustein School of Planning and Public Policy, said developers aren’t likely to follow Hess in pursuing power plant construction projects.
“The switch to natural gas lowers the price of electricity, and with that, a developer’s revenue stream falls, as well. There’s just not that much interest to build, even though there’s a long-term trend toward natural gas,” Felder said. “The question, then, is would this Hess plant be getting built without support from state legislation?”
Under that legislation, which enacted the state’s Long-Term Capacity Agreement pilot program, or LCAPP, the Hess plant is one of three natural gas-fueled projects eligible for payments from the state to make up the difference between price guarantees offered by the Board of Public Utilities and what utilities will pay the firms for electricity generation.
Since support from the program is limited to three projects, Felder said he doesn’t expect to see developers building other new plants in the state anytime soon, though he noted stricter regulations on coal-fueled power plants recently released by the U.S. Environmental Protection Agency may cause those plants to shut down early, and “then new plants will have to be built — and since you can’t really build a coal plant in New Jersey anymore, it’s likely they’ll be natural gas” plants.
For Hess’ proposed plant in Newark, a DEP spokesman said the air pollution control operating permit allows the plant to discharge emissions, though he noted “it’s a natural gas-fired plant, so its emissions will be insignificant.”
A project spokeswoman said it is now undergoing a 45-day EPA air operating permit review, and construction is targeted to begin before the end of the year.
The power plant — which will sit nearly a mile from the nearest residential area on a 23-acre brownfield side — will create 400 construction jobs and 36 permanent jobs, and produce enough clean energy for more than 700,000 homes, the company previously said. The Newark Planning Board approved the project in May.