Thursday, December 14, 2017
Business

Duke Energy quietly builds a $1.5 billion plant in Citrus County

CRYSTAL RIVER — Sequestered in a remote part of Citrus County is the most expensive development project you likely haven't heard of.

Duke Energy Florida is about halfway through construction of its new $1.5-billion natural gas plant in Crystal River. When completed next year, the plant will help power its 1.8 million customers statewide.

"When I came here, I was like, 'This is going to be a bear,'" Robby Armstrong, senior construction specialist for Duke overseeing the project, said. But now, Armstrong says with relief, "We're almost done."

Related coverage: Trigaux: Can Duke Energy Florida's new chief grow a business when customers use less power?

The endeavor is among the most expensive along Florida's Gulf Coast. It's a third more expensive than Tampa International Airport's nearly-$1 billion renovation plan, and about half as expensive as the $3 billion Water Street Tampa, venture of local developer and Tampa Bay Lightning owner Jeff Vinik and Bill Gates' Cascade Investment.

The fast-growing project sits on 200 of the 5,100-acre Duke Energy complex, neighboring the utility's other power generators: two coal-fired plants and a now-defunct nuclear facility. In 2009, the adjacent nuclear plant went offline because of a botched DIY repair Progress Energy, later acquired by Duke, made that resulted in a $1.7 billion bill for consumers and an unusable nuclear facility.

Related coverage: Duke Energy customers will pay $108 million a year for canceled nuclear plants

Since then, Duke has had to replace the energy that plant generated by diverting power from its other sites around the state, leaning on its local coal plants and buying from other utilities.

The natural gas facility is meant to help shoulder that load. It will come on in two stages — half in mid-2018 and fully by the end of 2018. Currently, construction is on pace, says Duke's Armstrong.

When it is up and running, the plant will produce an average of 1,640 megawatts. One megawatt can power 800 average-sized homes.

This is Duke Energy's largest combined cycle project. A combined cycle power plant uses gas and steam to generate energy, and it recycles heat generated in the process to power another turbine, which produces more energy. It has two others up the coast — one in South Carolina that will produce 750 megawatts of energy, and one in North Carolina that will produce 560 megawatts.

The supply of natural gas will come from the Sabal Trail, a natural gas pipeline running from Alabama to Florida. Duke Energy bought a 7.5 percent ownership stake in the 500-mile pipeline in 2015, investing $225 million. The Sabal Trail, one of three major pipelines Duke uses for its natural gas plants in Florida, will begin supplying gas around October.

Working on the site

Completing the construction are 2,000 workers, far more than Duke's anticipated 600 to 700 when it applied for permits several years ago. The increased workforce did not affect the budget or the project's timetable, Duke said. Many of its workers are coming from local counties or elsewhere in Florida, but many out-of-state construction crew members are here as well.

Once construction is complete on the natural gas plant, between 50 and 75 workers will be permanently stationed at the plant. Most have already been hired and are undergoing training so operations can begin immediately.

In a dramatic industry rebound from the Great Recession, a national construction worker shortage has arisen, particularly for skilled labor. Many skilled workers either left the work force or switched career paths, and as many in the baby boomer generation begin to retire, the gap they are leaving isn't being adequately filled with what would normally be a class of younger workers.

"We're feeling it now because companies like quality subcontractors (are) not bidding the amount of projects they normally would," Steve Cona III, president of industry group Associated Builders and Contractors, said.

But Armstrong and Duke spokesperson Heather Danenhower say they haven't had any trouble hiring enough workers within their budget yet.

As other major projects begin in coming months — such as Water Street Tampa and Tampa International Airport's second phase of renovations — the shortage could become more apparent, according to Cona.

"Things might get delayed or pushed back because there aren't enough people to build those projects," he said.

Since 2015, the site has reported 14 injuries to the Occupational Safety and Health Administration.

Economic impact

The plant is expected to have a major economic impact on the Citrus County region, even beyond its completion. Duke forecasted the project will provide $600 million to the surrounding community throughout construction through payroll, construction workers living in the area and any money spent by workers who patronize local businesses.

"The people who work here not only work here, they live here, they play here, they raise their children here," Danenhower said. "As a company, even though we're a large company, we have a vested interest in the local community and giving back."

Part of the impact comes from hiring local businesses for goods and services on the site. About 100 companies — a mix of local and far-flung — supply goods and services. Fire extinguishers, waste disposal services and concrete come from businesses within surrounding counties. Other suppliers are from farther away. Fluor Corp., which oversees construction, procurement and engineering, is based in Irving, Tx., while Vogt Power International, which manufactured the heat-recovery steam generators at the plant, is from Louisville, Ky.

Once the plant is running, Duke will begin paying about $4.1 million in property taxes each year to Citrus County, starting with the 2019 tax period. It also anticipates bringing $13 million annually into the local economy through remaining workers who live nearby and work at the plant.

For Duke customers, there is a price for progress. Ratepayers are expected to pay an increase of $6.55 per 1000 kilowatt hours in their monthly bills once the plant is up running. That number is subject to change based on the Florida Public Service Commission's approval.

Contact Malena Carollo at [email protected] or (727) 892-2249. Follow @malenacarollo on Twitter.

     
 
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