The V.I. Water and Power Authority is working to finish installation of more efficient Wartsila generating units at the Harley Power Plant on St. Thomas, which are expected to be ready for “first fire” by June 13, according to WAPA CEO Andy Smith.
Smith updated members of the Public Services Commission at a recent meeting, following supply chain delays in recent months.
The delayed control cabling is now over 95% procured, Smith said, and “the first-fire date when delays were encountered was established as June 13, that date has held. So, it’s encouraging that that date is not changing.”
The long-awaited Wartsila project will add four new propane generators and 9 megawatts of battery storage, and the new units “are 30% and 70% more efficient than the units they will displace, respectively,” according to WAPA.
An initial timeline established in 2019 estimated two years for completion, but the project was delayed by the pandemic and other issues.
In terms of finally starting the new units, “they were always intended to be commissioned on light fuel oil or diesel first, and then they get tested on propane,” Smith said.
Disputes with propane supplier Vitol complicated the process of interconnecting the new units to propane, and “I think everyone knows that the relationship between WAPA and Vitol historically, was not great. That is now advancing,” Smith said.
WAPA made an initial $45 million payment to Vitol under a buyout agreement that will end the territory’s relationship with the fuel supplier after years of nonpayment by WAPA. The cash-strapped Authority was able to enter the buyout thanks to a $100 million line of credit obtained by the V.I. government, and the second and final $100 million payment to Vitol is due by Aug. 14.
Smith told the PSC that WAPA recently met with the third-party operations and maintenance company that has been running the existing propane generators for Vitol, and “I think they came away from that meeting understanding that the economic value of this on propane was significant.”
Smith said there were “creative solutions that were discussed” to get the new generators hooked up to propane, and “we want to operate on propane as quickly as we can,” and will be seeking proposals.
“To put some numbers in perspective, even on diesel, the Wartsilas save us money,” Smith said.
The Wartsilas are 30 to 35% more efficient while running diesel than WAPA’s existing generators, so “that’s about $1 million a month that we would save with those Wartsilas online with diesel. That $1 million goes to roughly $3 million when they’re on propane. $3 million, to put in context for everyone, is about 25% of the Authority’s annual fuel cost,” Smith said.
WAPA is not collecting enough in rates to cover its actual fuel costs, and the V.I. government has been supplementing WAPA’s fuel purchases with millions of dollars in federal American Rescue Plan Act funds per month.
That subsidy has kept rates down for WAPA customers, who are still paying approximately 41 cents per kilowatt hour, which is almost three times higher than the average U.S. power price of 15 cents per kilowatt hour, according to the U.S. Energy Information Administration.
Smith also updated the PSC on a wind power purchase agreement with Advance Power and a solar power purchase agreement with VI Electron. Advance Power is working on the permitting process, and the current timeline is 18 to 24 months to get units online after permitting is complete. VI Electron is clearing a site for two new solar fields on St. Croix, and is planning two more fields on St. Thomas and a single larger field on St. John, and the power purchase agreements with the renewable energy companies could help significantly lower WAPA’s fuel costs.
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