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3 NH biomass plants cease wood purchases after governor veto of subsidy

Three biomass-fired power plants in New Hampshire are winding down operations and have ceased buying their fuel supply of wood chips after Gov. Chris Sununu vetoed a bill to subsidize six biomass plants. However, the Republican governor signed into law separate legislation to extend a power purchase agreement that will see Eversource Energy subsidize the state's largest biomass plant.

Out of concern for consumers, Sununu vetoed on June 19 Senate Bill 365, which would have required the state's utilities to buy the entire output of six biomass power plants at a cost of approximately $25 million annually for three years. The subsidies, aimed at saving wood product jobs in the Granite State, would have been on top of subsidies that the six facilities already receive under S.B. 129, which became law in July 2017 without the governor's signature. S.B. 365 passed the state Senate by a vote of 17-4 in late March and House of Representatives by a vote of 225-108 in early May

SNL Image

The Burgess BioPower plant in Berlin, N.H.

Source: Gestamp Biomass

In reaction to the governor's veto of S.B. 365, ENGIE North America Inc. announced it has ceased buying wood chips from loggers for its Pinetree Power Inc. subsidiary's 20-MW Tamworth and 15-MW Bethlehem biomass power plants.

As reported by the Concord Monitor, Olympus Holdings LLC's majority-owned 16.5-MW Bridgewater power plant also stopped buying fuel supplies on June 20 while continuing to burn through existing stockpiles in the coming weeks. G2s Bridgewater Inc, Treebrook Inc and PJC Inc claim minority stakes in the plant.

ENGIE North America spokesperson Carol Churchill said in an interview that the Bethlehem and Tamworth plants have gone into reserve shutdown status after ceasing purchases of wood supplies on June 22.

"This means that if power prices make it economically viable for us to operate or if [regional power grid operator] ISO New England calls on us to operate [for reliability reasons], we will do so,” Churchill said. "But we will run the plants until the majority of the wood onsite has been consumed. And we'll leave about a three- to five-day supply so that if ... [a plant restarts] we would have enough wood to operate."

Churchill said the prospect of the plants running through the end of the summer is unlikely, given the outlook of power prices. ENGIE will make a long-term decision on the plants' future in September if the legislature does not override the veto, she said.

The loss of the plants will have an economic domino effect on the state's North Country. As Churchill explained, biomass plants in the state consume 40% of the low-grade timber that is harvested each year in New Hampshire and are more than often the only customer for independently-owned wood chip suppliers. ENGIE's two plants alone burn 550,000 tons of wood a year, employ 40 people together and help to support hundreds of local fuel suppliers and vendors, she said.

However, Sununu said in his veto of S.B. 365 that the subsidy was expected to increase revenues of wood product suppliers by only 3.5% at the most.

Sununu on June 27 did sign S.B. 577 to extend an expiring power supply contract for Eversource to subsidize the 67.5-MW Burgess BioPower plant in Coös County. In November 2017, Eversource said the ratepayer-backed payments to Burgess had grown to $52.3 million as of April 2017 and were expected to hit their $100 million cap by April 2020.

The oil- and wood chip-burning Burgess plant came online in late 2013 to fill the economic footprint of a local paper mill that shuttered. The facility is operated by Delta Power Services and jointly owned by subsidiaries of CSE Spain SAL, Acek Desarrollo y Gestión Industrial S.L. and Jenis Investment Co. LLC.

Manchester's New Hampshire Union Leader reported Sununu saying the Burgess subsidy "was a difficult bill for him to sign” but did not want to see economic progress undone in the North Country, which is still reeling from the shuttering of paper mills and other manufacturers. S.B. 577 passed the Senate 19-4 in March and the House 254-64 in May.

ENGIE SA is the parent company of ENGIE North America.