Developer Seeks Equity Investors for $925M Power Plant
LORDSTOWN, Ohio – The developer behind a $925 million natural-gas power plant slated for the Lordstown Industrial Park said Monday that it’s aggressively going after the key piece of equity funding needed to bring the project over the finish line.
“We think because the plant is favorably located and has great characteristics, we could be in a position to break ground and have a financial closing by summer of this year,” said Bill Siderewicz, president of Massachusetts-based Clean Energy Future LLC.
Siderewicz said the company’s financial advisor, Whitehall & Co., is reaching out to investors all over the world in order to secure $425 million in equity funding for the Trumbull Energy Center. This, coupled with $500 million in bank financing, would be enough to cover the costs of the project, he said.
“We have people traveling from Saudi Arabia to Munich to London to Toronto to New York to Chicago to L.A., Hong Kong, Seoul, Australia, as well as Tokyo, looking for that right combination of equity to put into the plant,” he told reporters at a press conference. “It takes a while to put together the paperwork of financing of this magnitude.”
This is the second such plant that would be constructed in the industrial park. Last year, the new Lordstown Energy Center, also developed by Clean Energy Future, began operations there. Clean Energy then sold a 70% stake of the project to Macquarie, an international investment firm. That sale included acreage that was initially earmarked for the second plant.
A dispute with Macquarie over an option-to-purchase agreement that would allow Clean Energy to construct another plant on the land led to litigation in Trumbull County Common Pleas Court that lasted more than a year.
Those issues were resolved on Friday, Siderewicz said, as about 100 acres near the site was transferred to Clean Energy for the project.
Yet the delay led to increased costs of about $12 million, he noted. “Before we were involved in litigation, we were about 75% down the road of raising all the money to break ground in the fall of 2017,” he said.
Siderewicz said that with the legal issues out of the way, his company can shore up bank financing in about three months, and is shooting to sew up equity financing by the summer so work could begin in August.
Nearly 1,000 construction workers would be required to build the new plant, which would take about 34 months after groundbreaking, he said. In all, the project could consume 3 million man-hours.
The Trumbull Energy Center would be almost identical to the Lordstown Energy Center, but includes some equipment that’s more advanced, Siderewicz said. Once operational, the plant would provide 20 to 25 full-time jobs.
However, the new plant has significant long-term benefits for the community and Ohio, Siderewicz said.
Over a 50-year period, for example, the plant would pay out approximately $149 million in property taxes to Lordstown and Trumbull County, and Lordstown alone would realize $1.9 million in payroll taxes, $85 million in income taxes and another $11.4 million in potable water fees.
“That number is almost a quarter of a billion dollars to Lordstown,” he said.
However, when one factors in other benefits such as water purchases from the city of Warren, union wages to build the plant, the purchase of local materials and services, income tax to the state of Ohio and savings passed on to ratepayers across the region, then the number grows substantially, Siderewicz noted.
“You add those up over 50 years and that number is $26 billion,” he said.
Mayor Arno Hill said that the Trumbull Energy Center – along with a proposed TJX HomeGoods distribution center – are welcome projects since the village faces massive losses because of General Motors Co.’s decision late last year to shut down and unallocate a new product to its Lordstown manufacturing plant, eliminating more than 1,500 jobs. The last vehicle is expected to roll off the line March 8.
“You’ll never replace General Motors and we’re hoping that they’re not gone,” he said. “But we have to offset what General Motors has done right now. This will help us get through.”
Siderewicz also said that energy policy in Ohio is critical to allowing this plant and others like it to move forward.
Among his biggest concerns is talk in the legislature about providing a bailout to companies such as FirstEnergy to salvage its aging nuclear and coal-fired power plants. Both of FirstEnergy Nuclear Operating Co.’s nuclear plants – David-Besse near Toledo and the Perry Nuclear Power Station near Mentor – would cost taxpayers $600 million to subsidize operation, Siderewicz said.
“There are movements in Columbus to support this kind of subsidy plan, which would be a financial monkey wrench thrown into all the activity we’re planning,” Siderewicz said. Such a bailout plan could give would-be equity investors pause over whether it makes sense to direct their resources to more energy efficient plants such as the Trumbull Energy Center, he said.
However, a report by the Brattle Group has estimated it would cost Ohio customers $400 million more a year if the nuclear plants were shut down, noted Carlo LoParo, spokesman for Clean Energy Jobs Alliance. He said the plants provide more than 4,000 permanent Ohio jobs whereas the 1,000 jobs cited for the gas-fueled plant would be temporary.
Siderewicz said that plants such as the Trumbull Energy Center are able to manufacture electricity at half the cost of a nuclear or coal-fired plant, since natural gas is far less expensive than other fossil fuels. “Our cost is generally four cents, while big utilities charge eight cents per kilowatt hour,” he said.
Mayor Hill said he won’t know exactly how Trumbull Energy Center will help ease the shock of GM until work on the plant begins in earnest, but he noted that projects such as these help bring hope to younger people in the region.
“Right now, we’re in transition also,” he said. “This is a good start and it helps abate the pain we’re having from General Motors closing down.”
Pictured: Bill Siderewicz, president of Clean Energy Future LLC, and Lordstown Mayor Arno Hill discuss the proposed new Trumbull Energy Center at a news conference Monday afternoon.
Copyright 2020 The Business Journal, Youngstown, Ohio.