US LNG player New Fortress Energy has sold two of its operating power plans to the Puerto Rico Electric Power Authority, while it also secured a new gas supply contract from the latter.
The Wes Edens-led company sold the emergency power plants it constructed on behalf of the US Army Corps of Engineers in San Juan and Palo Seco to PREPA for $373 million in cash, subject to certain items and conditions.
These plants were developed by NFE in 2023 in rapid response to a competitive bid by the USACE to provide emergency power in order to stabilize the power grid in Puerto Rico.
According to NFE, they have become a “cornerstone of Puerto Rico’s energy portfolio, delivering critical baseload power to stabilize the grid in the aftermath of recent natural disasters, and as contemplated, their ownership has been transferred to PREPA.”
Gas supply
Following a competitive bid process, NFE was also awarded and has entered into a new island-wide 80 TBtu gas supply contract with PREPA, ensuring continued gas supply to these power plants for up to four years, it said.
The expanded volumes under the contract will enable conversion of other plants on the island from diesel to gas, providing “lower cost, cleaner energy” to Puerto Rico, NFE said.
As a result of the early termination of the contracts that have governed the construction, operations, and associated costs of these plants, NFE said it expects to negotiate a “mutually beneficial settlement of all outstanding obligations in the near future.”
Edens said NFE entered the Puerto Rico market in 2017 based on the island’s emergency need for natural gas and power.
“The transactions announced today mark a significant milestone in our continued commitment to Puerto Rico’s energy security and cost reduction efforts while significantly increasing our business in the region,” he said.