PSEG Moves Cautiously into Renewables Sector

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Researched by Industrial Info Resources (Sugar Land, Texas)--Public Services Enterprise Group (NYSE:PEG) (PSEG) (Newark, New Jersey) is gradually entering the renewable energy market through subsidiary PSEG Energy Holdings LLC. The company is primarily developing solar, offshore wind, and compressed-air energy storage projects. Randall E. Mehrberg, president and chief operating officer of PSEG Energy Holdings, discussed the company's renewable energy ventures at PSEG's recent analyst conference, held in New York earlier this week.

In November 2009, PSEG Solar Source LLC completed a 2-megawatt (MW) solar plant at the Mars Incorporated plant in Hackettstown, New Jersey, which provides about 20% of the plant's peak energy consumption. The facility has 28,000 solar panels and is located on 18 acres near the plant. PSEG appointed juwi solar Incorporated (Boulder, Colorado) to provide engineering, procurement and construction services for the project. "We have an additional 27 MW of solar projects in construction: one project in Jacksonville, Florida, one project in Ohio, and we have a pretty good pipeline of projects that we're excited about that we're pursuing," said Mehrberg. PSEG has invested approximately $100 million in solar projects to date.

The company is also taking advantage of stimulus funds for compressed-air energy storage projects. "We're enthusiastic about compressed-air energy storage," said Mehrberg. "We think it's the best large-scale technology out there. The United States government seems to think so as well, because our customers received almost $60 million in stimulus grants to proceed on two projects: one with NYSEG in New York and one with PG&E (NYSE:PCG) in California. PG&E is also expecting to receive another $30 million in state stimulus from California. We think that this technology is important and necessary to provide grid stability to all renewables to be sold as firm, dispatchable resources, to reduce the need for transmission, and to convert off-peak energy, of which we've seen an overabundance in some places, into on-peak energy."

The company is in the early stages of planning a 350-MW offshore windfarm 16 miles off the New Jersey coast. Mehrberg spoke of the merits of offshore energy, while at the same time, expressing the company's caution about wind power investments, primarily because of the planning and permitting processes. "We believe that offshore wind offers us a tremendous opportunity. We're near load centers. The wind blows harder and more evenly offshore. There's been tremendous expansion of offshore wind in Europe, but it's a walk for us--it's not a race, it's not a run. There are still a lot of things that need to be worked out, and we're investing prudently," said Mehrberg.

"The federal process to get approval for the lease site is a lengthy one, and we're working with the Department of the Interior and other agencies to shorten that. The revenue mechanism, while progressing in New Jersey, has not been finalized, and those things need to happen before we can move forward in a meaningful way. ...We're not going to be careless here; we're taking it one step at a time, and we're going to make sure that the necessary ingredients are locked in before we jump forward."

Industrial Info is tracking more than $1.3 billion of current and planned PSEG projects. Two large air-quality projects in PSEG's home state of New Jersey are scheduled to be completed in the coming months. The 660-MW coal- and gas-fired Unit 2 at the company's plant in Jersey City is completing installation of a wet scrubber, baghouse and selective catalytic reduction unit to reduce emissions. In Jersey City, a dry flue gas desulfurization unit is being installed on the 326-MW Unit 1 to reduce SO2 emissions. Industrial Info has been tracking both of these projects since their early planning stages in 2002. Information on these and other projects can be found in Industrial Info's North American Industrial Database.

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Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy-related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.