Response from Rick Franzese of the Bechtel Corporation’s Renovo Energy Center project, April 2022:
Response from Rick Franzese of the Bechtel Corporation’s Renovo Energy Center project, April 2022:
I write to respond to Joseph Minott’s Opinion article in the March 24th edition of the Record. Mr. Minott is Executive Director and Chief Counsel for the Clean Air Council, which, along with two other entities, have appealed a key permit for the Renovo Energy Center (REC) project. Mr. Minott concludes his article by stating “concerned residents and other stakeholders deserve to know the truth about the status of the project and its overall viability.” REC agrees, and we provide the following update on the project.
The REC project remains viable so long as the appeal of the project’s air permit is favorably resolved. Investor interest in the Renovo facility remains high, and increasingly so in light of current events. In particular, the war in Ukraine has highlighted the need for energy security and independence, which for the near-term in the United States can be reliably provided by domestically-sourced natural gas. Renewables, such as solar and wind, are not yet fully reliable baseload power supplies, even when augmented with the most advanced storage technology currently available.
Additionally, increased regulation is making coal-fired generation less viable, and gas-fired plants such as Renovo are needed to replace that baseload capacity. Contrary to Mr. Minott’s assertions regarding plant emissions, when new, state of the art power plants such as the approximately 1,240 MW REC project come online, they typically displace electricity that would otherwise have been generated by older and less efficient coal-fired and other older baseload plants with less effective pollution controls, resulting in a significant reduction in greenhouse gas emissions.
The appeal of the air permit presents a challenge to the project that will have to be resolved before construction can begin. When building a large new power plant such as Renovo, the developer typically obtains the necessary permits, obtains interconnection rights to the electrical grid, finalizes financing and starts construction. At Renovo, the Department of Environmental Protection issued our current air permit in April 2021. In October 2021, upon culmination of an unexpectedly long, almost seven year process, REC executed an interconnection agreement with PJM, the grid operator for one of the Renovo units. This completed the last major milestone before financing and construction of that unit could begin. An application for interconnection rights for the second Renovo unit is still pending with the NYISO grid operator.
Under normal circumstances REC would have begun moving to close on project financing and start of construction for the PJM unit upon executing the interconnection agreement with PJM. However, plant construction requires a major financial commitment, and the mere existence of the appeal to our air permit represents a financial risk that lenders and investors must consider. While we are confident that the Environmental Hearing Board will eventually uphold the permit, the simple fact is that despite the low probability of the permit being rescinded or substantially revised, the potential financial costs if that happened are substantial, and lenders and investors are rightfully concerned (e.g., think about asking a bank to approve a loan so you can start building a house before the property has been approved for that use). So while Mr. Minott correctly asserts there is no legal reason preventing REC from starting construction under the current permit, he does so knowing that, as a practical matter, lenders and investors will wait until the appeal is resolved and the uncertainty risk is removed before finalizing their investment commitment and construction can actually begin.
Further, Mr. Minott’s assertion that the Borough entered into a community benefits agreement with REC without adequate community engagement is also incorrect. The provisions in the benefits agreement were recommended by a focus group of 14 residents of the Borough and surrounding area that was formed shortly after the first community-wide open house sponsored by REC. REC met with this focus group for the better part of a year before their recommendations were finalized, which were then presented at a second community-wide open house. Local attendees participating at these open houses numbered in the hundreds. The agreement was then reviewed and finalized by the Borough’s legal counsel and approved by the Borough Council.
We know that this project has been frustratingly long in the making. REC has been working diligently for over eight years and has invested millions of dollars to move this project from plan to reality. We are thankful to have your strong support on all levels – local, county and state. The plant will provide a much-needed economic boost to the community during both construction and operation, delivering affordable, reliable, and more sustainable energy to Pennsylvania. REC remains committed to the project, and is willing to engage with the Clean Air Council, the other parties appealing the plan approval and the Department of Environmental Protection in meaningful negotiations to promptly resolve the appeal so we can get on with construction of this much needed project.
Rick Franzese
Renovo Energy Center
