Soft Economy Takes Steam Out Of Energy Plant

March 25, 2002
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TALLMADGE TOWNSHIP — Higher than expected construction costs and soft demand for electricity resulting from the U.S. recession prompted two energy firms to delay construction of a $400 million power plant planned in Ottawa County.

Work on the 1,100-megawatt plant was initially scheduled to begin this spring, with electric generation commencing in early 2004. With the economy soft and bids for the project coming in high, Panda Energy International Inc. and Alliant Energy Corp. decided last month to delay construction for an undetermined period.

“Primarily it’s the economic situation right now,” said Harold Green, director of corporate communications for the Dallas-based Panda Energy.

The recession and resulting decreased demand for electricity nationwide has forced many energy firms to delay or curtail power plant construction. Green stressed that Panda and Alliant remain committed to the project, planned for a site at Lake Michigan Drive and 8th Avenue in Tallmadge Township, although he couldn’t say when the company expects to break ground and begin generating electricity.

“It’s a wonderful place to build a plant and we’re going to build the plant. Everything’s still going forward,” Green said. “It’s not a significant delay. We’d like the economy to turn around a little bit.

“When industry’s not working as much, there’s not as much demand for electricity,” he said.

Panda Energy first announced plans for the plant in June 2000, at a time when in-state generating capacity had less than a 5 percent reserve margin, forcing electric utilities to rely heavily on out-of-state generators to meet peak demands during the summer. Several new projects have since emerged to significantly increase in-state generating capacity.

Panda and Alliant teamed up for the project last October and plan to sell all of the power produced in Tallmadge Township to the wholesale electric market for resale to residential and commercial customers in the Midwest. They are seeking to work with new contractors to lower construction costs, Green said.

In deciding when to proceed with the Tallmadge Township plant, Panda and Alliant want to strike a balance between ensuring there’s adequate demand for the electricity it will generate but not wait so long that their competitors grab the market ahead of them. The firms also will seek to set a new construction schedule that would have the plant begin operations just prior to the traditional peak summer months when demand for electricity is highest, Green said.

“You’re always hoping your team has the better judgment on when to go forward so you don’t miss opportunity,” he said. “You want to bring your plant online at the most opportune time.”

The Tallmadge facility is designed as a combined-cycle plant that, in addition to natural gas-fired turbines, will use hot gases from its emissions to produce steam and drive a generator.               

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