USC Reaches $24 million Settlement with Developer of Closed Biomass Facility
- by Andrew Shain, October 4, 2013. Source: Rock Hill Herald
[[{"type":"media","view_mode":"media_large","fid":"134","attributes":{"alt":"","class":"media-image","style":"width: 333px; height: 250px; margin-left: 7px; margin-right: 7px; float: left;"}}]]The University of South Carolina has reached a $24 million settlement with Wisconsin-based Johnson Controls over a failed biomass power plant.
The agreement calls for Johnson to pay the remaining $14.4 million owed on the $19.1 million plant at Whaley and Sumter streets, USC chief financial officer Ed Walton said after meeting with school trustees.
Johnson will remove biomass equipment in the building and give USC the empty structure, valued at $1.6 million. The company already has paid the school nearly $8 million to cover losses from the plant, which has stood idle since 2011.
USC and Johnson discussed the possibility of having the company convert the plant to use another source of power, such as natural gas-fired turbines. But after more than a year of talks, the sides agreed to a cash settlement, Walton said.
“The plant never worked,” Walton said. “The contract allowed us to recapture our costs.”
In its initial contract with USC, Johnson agreed it would repay any difference to USC if the plant failed to save the school $2.1 million a year in energy costs.
“This project was not as successful as Johnson Controls had hoped,” the company said in a statement. “We have, however, stood behind all our commitments to the university. ... The economic attractiveness of the biomass energy plant for the university has changed since this project was first developed. The university determined it was not in its best interests to complete construction of the plant. As the university’s partner, we have supported its decision.”
USC will research how to use the building next, Walton said.
The school now gets power from four natural gas plants.
The biomass plant was supposed to provide electricity from steam generated by heating wood chips in a way that would provide clean energy.
The plant closed after more than three dozen breakdowns and a 2009 explosion that sent a metal panel 60 feet in the air.
The plant’s woes have led USC to conduct more rigorous analysis of the potential benefits and risks of new big-ticket projects, school officials said.
An audit of the original plant contract, released a year ago, said USC should have checked Johnson Controls’ reports on savings when the facility was operating, and the university’s trustees should have discussed the risks of the new technology before approving the deal.