120 MW solar projects can move forward

POWER STRUGGLE: Solar panel production is shown in this photo from Hanwha Energy Corp. KEPCO-LG CNS consortium, and Hanwha Energy and Pacific Petroleum Trading Corp. can move forward to construct and operate 60-megawatt power plants for the Guam Power Authority, following the resolution of an appeal filed by a pair of losing bidders. Photo courtesy of Hanwha Group

In the Consolidated Commission on Utilities meeting next week, commissioners will discuss the details of the Guam Power Authority’s newest power purchase agreement with a consortium that plans to build an estimated $200 million solar power plant in Guam's Sasayan, Mangilao area.

The proposed power purchase agreement will spell out the details on GPA's commitment to buy a set amount of solar power from the investors, which is a partnership between Korea Electric Power Corp., South Korea's state-run power company, and a subsidiary of electronics and appliance giant LG CNS.

The investors' partnership, called KEPCO-LG CNS Consortium, is expected to build a $60 megawatt solar power plant that would also include a system that stores power for nighttime use.

Under the potential deal, the consortium would pay for the cost of developing the plant and storage facility, and then recoup its money and turn a profit by entering into the power purchase agreement that would commit GPA to buy a certain amount of solar energy.

The consortium expects to make $350 million over the 25-year annual solar power purchases by GPA, according to South Korean news agency Yonhap.

Two-tier review

CCU's approval kicks off the first of a two-tier review. Guam's rate regulator, the Public Utilities Commission, must first review the proposed agreement's impact on the cost of electricity to tens of thousands of island consumers, businesses and government customers.

The CCU on Thursday met to listen to the power authority's presentation seeking approval to submit the proposed agreement to the PUC.

In June, the CCU authorized the power authority to petition PUC to award the second phase of a renewable acquisition bid – for two 30-megawatt solar projects – to Hanwha Energy Corp.

Hanhwa and the KEPCO-LG CNS Consortium could potentially produce 120 megawatts, or nearly half the entire island's power needs.

According to GPA, the petition was filed at the Public Utilities Commission during the same month.

John Benavente, GPA general manager, said KEPCO-LG representatives have agreed to the terms and conditions of the agreement.

System impact study

According to GPA, it continues to work with its consultant on a system impact study to define the interconnection requirements under the power purchase agreement. The solar plants still must connect to the GPA power grid. However, these requirements will not change the terms and conditions of the PPA, including contract price and performance guarantees and penalties.

The KEPCO-LG CNS Consortium solar projects will be located at Sasayan, Mangilao.

GPA has been expanding its renewable energy investments this year.

Back in May, GPA signed a $42 million contract for a battery storage system with LG CNS. With the new investment, the power authority hopes to alleviate intermittent frequency in the power grid produced by the 25-megawatt solar farm in Dandan.

GPA and the U.S. Navy also entered into a lease agreement earlier this year for 164 acres of military-held lands for the construction of renewable energy facilities with a 40-megawatt generating capacity.

In June, Benavente said "GPA considers renewable energy an effective hedge against rising fuel oil prices," noting that over the course of the contract, “GPA ratepayers can expect significant fuel oil savings based on current and projected (fuel surcharge) rates."

"Utility-scale renewable projects like these will make the benefits of solar energy available to all ratepayers at rates that are affordable, stable and not subjected to world oil prices," Benavente said.

GPA has a renewable energy portfolio goal of producing 25 percent from renewable energy sources – such as wind and solar – by 2035.

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