Public Service of New Hampshire (PSNH), the only regulated utility in New England that still owns its generating assets, commissioned the Northern Wood Power Project (NWPP) at its existing Schiller Station in December 2006. Schiller Station (Figure 1), in the city of Portsmouth on the Piscataqua River border with Maine, is PSNH's third-largest facility and has been in continuous operation for six decades. The first three units were retired decades ago, but Units 4, 5, and 6—each rated at 50 MW and built in the early 1950s—remain hard at work. In the early 1980s, they were refurbished to burn less than 1% sulfur bituminous coal and No. 6 fuel oil. Now, Unit 5 is burning wood instead of coal.
1. Better than new. Public Service of New Hampshire repowered Unit 5 of its Schiller Station with a wood-burning circulating fluidized-bed boiler. Sales of renewable energy certificates will completely pay for the project. Courtesy: PSNH
From dream to reality
"A little over four years ago, Northern Wood Power was just a vision that PSNH brought to state legislators with the promise of lower emissions, a revitalized forestry industry, and low electric rates for New Hampshire homes and businesses," said Gary Long, PSNH president and CEO, at the project's commissioning ceremony on December 1, 2006. "We've demonstrated that PSNH can help New Hampshire lead the way in adding 'green' power production while maintaining a significant price advantage for our 490,000 customers."
PSNH well understands New England's need for more usage of renewable energy and is prepared to invest in more regulated generation to help meet it. However, current state law prohibits PSNH from acquiring or building any new plants—including any powered by renewables. That was one of the tradeoffs PSNH made to retain its generating fleet after deregulation.
PSNH owns and operates about 62% of its needed generation capacity, a 1,150-MW portfolio consisting of hydro plus oil-, gas-, and coal-fired plants. The remainder is bought on the open market. Those purchases currently include the output of dozens of small, independent hydroelectric facilities and five privately owned biopower facilities in New Hampshire.
Paying its own way
NWPP is among the largest renewable energy projects in the U.S. and the only sizable one to replace a coal boiler with a biomass-fueled steam boiler. The project's plan to make wood chips and other clean, low-grade wood materials the new fuel source was enthusiastically supported by New Hampshire's forest industry. PSNH determined that repowering one of the 50-MW units at Schiller Station would generate enough revenue from sales of renewable energy certificates (RECs) and federal tax incentives to offset the entire $75 million capital cost of the project. After convincing the state legislature and a host of regulators that such a project was feasible, the Northern Wood Power Project was set in motion.
RECs represent generation of electricity produced from an approved renewable energy source. Utilities typically purchase them to meet state renewable portfolio standards (RPS) that require a certain percentage of their generation to come from renewables. If a utility chooses not to build its own renewable portfolio, it can purchase RECs at a stipulated default price to meet its RPS obligations. Purchasing RECs doesn't mean you purchased the actual power they represent—you only get the "registration" of the green generation, not the "title," so to speak. A qualified generator now makes two marketable products: For every real electrical megawatt-hour produced, a paper REC is also generated.
PSNH estimates that the NWPP will generate between 300,000 and 400,000 RECs each year. Selling them will bring in about $15 million of additional revenue annually, helping to keep rates low for PSNH customers. Because the repowered Unit 5 is an open-loop biomass system, it also is eligible for a federal renewable electricity production tax credit of 0.9 cents/kWh for its first 10 years of operation.
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