K&M Advisors is proud to add another island to the list of islands where K&M is advising on energy transition. In this case, K&M is supporting the Guam Power Authority’s (GPA) transition towards lower costs and cleaner energy through the development of critical LNG infrastructure for the island’s Ukudu Combined Cycle Power Plant.

Under this contract, K&M Advisors is leading a team, including GHD (marine experts) and CH-IV (gas experts), advising GPA on the technical and commercial feasibility of developing an LNG import solution to supply natural gas to the 198 MW Ukudu power plant. The Ukudu plant will be commissioned in 2025 and will run on Ultra-Low Sulfur Diesel until natural gas is available. K&M’s scope of work includes a thorough demand analysis, sourcing and delivery options, site and configuration selection, conceptual design, and cost estimates for the LNG import solution. Additionally, K&M will assess possible business models and financial viability to ensure a robust foundation for the project. If the feasibility is confirmed, we will support GPA in procuring the terminal, negotiating a gas supply agreement, and overseeing the implementation phase.

Like other island economies undertaking energy transition plans, Guam has set ambitious renewable energy goals that would gradually displace thermal generation. This makes K&M’s work more challenging. The LNG/gas supply solution that GPA would develop needs to be commissioned as soon as possible to maximize fuel cost savings from switching from USLD to natural gas. However, this solution also needs to be flexible to accommodate a decreasing gas demand as renewable energy generation increases. The LNG/gas solution would also need to accommodate potential delays in the implementation of renewable energy projects or climate changes that result in higher electricity demand or lower renewable energy generation.

K&M has developed a set of tools to manage these challenges. For example, develop a gas demand forecasting model that estimates gas-fired power plant hourly dispatch for each year through 2050, considering factors such as electricity load, hourly generation from renewable sources, BESS charge and discharge, and the plant’s availability and heat rate curves. K&M’s model evaluates scenarios based on realistic assumptions on critical variables like renewable energy penetration. Similarly, K&M has developed contract provisions that ensure that GPA does not commit to onerous take-or-pay obligations but that the gas supplier recovers its fixed costs as volumes decrease. These and other tools developed by K&M are enabling the viability of LNG in small islands like Guam with ambitious renewable energy goals.