$1B Dover Energy Project Gets Major Investment Funding

John Jordan | August 2016

DOVER, NY—The long-delayed Cricket Valley electric generating plant to be built in Dutchess County has secured a major investment from funds managed by New York City-based BlackRock.

Also, a chief executive with the developer of the $1-billion project in Dover said the firm hopes to close on financing for the energy project in the fourth quarter and begin work before year’s-end.

Funds managed by BlackRock’s Alternative Solutions Group, in partnership with BlackRock Real Assets, entered an agreement with Advanced Power NA Inc. to invest approximately 10% in the 1,100-megawatt combined cycle gas turbine Cricket Valley electric generating facility, utilizing General Electric 7FA.05 combustion turbine generators. Based on project cost estimates, the BlackRock investment in Cricket Valley could be valued at approximately $100 million. Advanced Power did not provide specifics on the investment and officials with BlackRock refused comment at press time to verify the projected investment value. Another partner in the Cricket Valley energy plant project is TIAA-CREF.

In its announcement, BlackRock stated that construction of the plant is expected to begin in the fourth quarter of this year and is projected to be completed in the fourth quarter of 2019. Robert DeMeyere, project manager of Cricket Valley Energy and vice president, development at Advanced Power NA, said that the firm hopes to secure financial close on the project in the fourth quarter and begin work on the development by the end of this year. The Dover energy plant, which will be a merchant energy facility that will sell its electricity on the wholesale market, was first proposed in 2009.

“We’re pleased to partner with Advanced Power on Cricket Valley and we look forward to growing our relationship in the future,” stated David Giordano, head of the North American Renewable Power Infrastructure team for BlackRock. “This transaction represents the strong growth in natural gas investment opportunities given the increased retirements in aging generation facilities, and will bring much needed generation capacity to the supply-constrained Hudson Valley region.”

Advanced Power CEO, Tom Spang said of the investment deal for Cricket Valley, “BlackRock’s investment in Cricket Valley represents a strong vote of confidence in a project that enjoys strong community support. We are delighted that BlackRock has joined the Cricket Valley project and we look forward to working together to see it through to construction and operation.”

DeMeyere said when asked to provide a project timeline, “We have bank groups put together and we are trying as hard as we can to get a (financial) closing this fourth quarter.”

He added that Advanced Power hopes to begin work on the first phase of the project—the demolition of 12 buildings at the project site—before the end of this year. The first phase will take about six months to complete and full construction of the plant will take about 38 months. The demolition contractor is Environmental Remediation Services Inc. of East Syracuse, NY. The Engineer Procure Construction (EPC) contractor is Bechtel of San Francisco, CA.

He added that the project was ready to go to financing in June 2013 and had secured all of its permits for the generating plant, but was awaiting the New York Independent System Operator to complete its Facilities Interconnection study. In July 2013, the NYISO issued a report that mandated Advanced Power to build a 14-mile long transmission line from the project site to the Pleasant Valley substation. The new transmission line will likely cost about $50 million, he noted.

The process to permit the newly required transmission line took approximately two-and-a-half years to complete and was secured in April 2016.

DeMeyere said that Advanced Power believes there will be sufficient demand for the energy produced at the Dover facility. The firm undertakes energy studies every six months and “we are confident that there is a good market in New York. We wouldn’t have put seven years into it.”

Advanced Power is a privately owned company that develops independent power projects in North America and Europe and has 7,000 MW in development or operation. Majority-owned by senior management, Advanced Power has offices in Boston and London and is headquartered in Zug, Switzerland. Advanced Power has successfully developed more than 15,000 MW of power generation projects, and subsequently closed $7 billion of limited recourse project financing.

BlackRock operates one of the largest infrastructure investment platforms in the world with more than $9 billion in investor commitments and invested assets as of June 30, 2016.

 

Photo: Rendering of Cricket Valley electric generating plant

John Jordan
Editor, Real Estate In-Depth