Japanese firm has different plan for Cape power plants

Proposes using the facility as a conduit for offshore wind

A JAPANESE COMPANY is buying the oil and gas-fired power plants located in Sandwich on the Cape Cod Canal and seeking to repurpose them primarily as a conduit for delivering energy from offshore wind farms to the New England power grid.

At first glance, the power plants wouldn’t seem to hold much value. One is an oil plant built 54 years ago. The other two are plants that can burn either oil or gas — one is 46 years old and the other is three years old. The two old plants are peakers, called into use only at times of peak demand when additional supplies of electricity are desperately needed on the grid. All three of the plants run on fossil fuels.

But the plants are also sitting on what its new owners see as a valuable asset — an interconnection agreement that allows the plant to deliver up to 1,500 megawatts of electricity into the regional power grid. The plants rarely deliver that much power, and the new owners think the unused capacity could be sold to offshore wind farms, saving them the money and trouble of building their own connections to the grid.

The new owners also think the power plants, particularly the newest one, can be used as backup sources of electricity for times when the wind isn’t blowing, the sun isn’t shining, and storage batteries are drained. They envision shifting the fuel of the power plants initially to some form of renewable diesel and eventually to hydrogen produced using electricity from the offshore wind farms.

All of these schemes have kinks. They also require the blessing of regulators and there is no guarantee that will happen. But the proposal by the American subsidiary of JERA is an example of how power generators relying on fossil fuels are starting to rethink their strategies for the future.

JERA is a seven-year-old joint venture of two large Japanese utilities that produce roughly 30 percent of Japan’s electricity. The company has invested heavily in power generation outside of Japan, including a 300 megawatt wind project in Texas and various power plants fueled by fossil fuels, and is very active in the shipment of liquid natural gas. Japan is a country heavily reliant on fossil fuels to produce electricity and eager to find a way to decarbonize its power sector. The company sees the Cape Cod Canal plants and a separate power plant it owns in New Jersey where hydrogen is being introduced as the fuel as laboratories for their ideas.

“It’s the perfect place to prove out our concept,” said Steven Winn, chief executive officer of JERA Americas Inc. of Houston, in an interview. He was joined by William Zipf, vice president of development, and John O’Brien, the vice president of government and regulatory affairs. O’Brien is a former Massachusetts state senator.

“In the past, these assets would be valued purely on their ability to provide electricity to the market,” said Winn in a press statement.  “JERA Americas takes a broader view – one of taking traditional thermal energy sites and implementing constructive changes that support net zero CO2 emissions goals.”

JERA’s purchase price for the three plants in Sandwich and a fourth oil/gas plant in Bucksport, Maine, was not disclosed.

Under current regulatory rules, each wind farm that gets built off the coast of Massachusetts has to pay for the transmission infrastructure needed to connect with the regional power grid. Vineyard Wind and Mayflower Wind, the companies that won the state’s first two offshore wind procurements, are running underwater cables to Cape Cod and building the necessary infrastructure there to connect to a transmission line running from the Cape up to the Boston area.

Industry officials say the cost of connecting to the grid for the first two wind farms will be reasonable because of available transmission capacity, but the cost for subsequent wind farms could be very high because new transmission capacity would need to be built.

“Building new transmission lines up through those markets is going to be really expensive — hundreds of millions of dollars,” said Winn.

Mayflower Wind, with its second wind farm, dealt with the high cost by going a different route. It is proposing to bring the power from its second wind farm ashore at Brayton Point in Somerset, the site of a former coal-fired power plant, and connect there.

Winn is proposing that new wind farms being built off the Massachusetts coast use the underused interconnection held by the Cape Cod Canal power plants to tie into the power grid.

“We’d like to modify the purpose of Canal, make it so its primary purpose is a transmission conduit for offshore wind,” he said.

The sharing of an interconnection is not allowed under current regulatory rules, Winn said, but he believes that needs to change to keep costs down. He sees no need to pay for more transmission infrastructure if existing infrastructure is being underutilized.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

“You don’t really need to pay for all of this twice,” he said. “We know this is where the market is going anyway, so why don’t we just embrace it and help it get there.”

Officials at ISO-New England, which oversees the New England power grid, declined comment.