Lansing, MI utility schedules groundbreaking on $500M natural gas plant

Dive Brief:

The Lansing (MI) Board of Water and Light has announced that it will start construction on a $500 million natural gas plant in 2018, according to Michigan Radio.
The new plant will replace an old coal-powered facility and is part of the utility's plan to produce 30% of its electricity from clean energy sources by 2020. The natural gas facility is expected to fill the gap created by any lulls in its wind and solar energy output.
The utility recently increased rates as part of a three-year plan, and Lansing board officials said customers will not see bigger bills because of the new plant. The plant is slated to go online in the first quarter of 2021.

Dive Insight:

The shrinking gap between oil and natural gas prices has hindered some natural gas investment. For that reason, South African chemical and energy company Sasol said last month that it had canceled its plans to build a $15 billion gas-to-liquids (GTL) factory near Lake Charles, LA. The company had monitored oil pricing trends for three years before abandoning the project. The facility would have generated 750 full-time jobs, but Sasol said it would now turn its attention to the $11 billion ethane cracker plant under construction on the same site.

However, because Sasol scrapped the deal, Louisiana can save the $200 million in incentives it promised the company in exchange for constructing the facility. That amount included $115 million to help cover land purchase costs and infrastructure around the plant. The deal also incorporated a 15% payroll credit that could have netted the company almost $10 million.

States and local governments are becoming increasingly willing to come across with impressive incentive and tax credit programs in order to lure big companies to their areas. Those vying for Amazon's new second North American headquarters, HQ2, are no exception.

But companies are also often on the hook for paybacks to the community. South Korean electronics company LG is paying for infrastructure work around its $250 million washing machine factory in Clarksville, TN. The company has also agreed to hire veterans and train local residents for factory jobs in return for financial incentives from state and local authorities.