Originally Posted on Recharge
By Richard A. Kessler in Fort Worth
Limited options for developers in area of US northeast ‘off the transmission backbone’ prompting developers to explore project-speciﬁc export lines.
New Jersey offshore wind project developers will face increasing pressure to ﬁnd their own transmission solutions as the state steps up procurements given the scarcity of near-shore interconnection points.
“There is not a lot of transmission along the coast, which will be a bit of a challenge if you are planning to develop offshore wind. The backbone transmission grid doesn’t go up there,” said Suzanne Glatz, director of infrastructure planning at PJM Interconnection.
PJM, the largest US regional transmission operator (RTO), operates the grid and competitive wholesale electricity market in all or parts of 13 states including New Jersey.
She told the US Offshore Wind 2020 conference last week that the nearest 500kV substation in northern New Jersey is 32-40 km (20-25 miles) from shore and 64 km in the state’s southern region. The nearest 230kV substation is 16 km away in central New Jersey and 24 km distant in the south.
Substations with lesser voltages such as 138kV systems can’t fully accommodate the large injections of power that projects will need to deliver as the state ramps its offshore wind programme.
Developers that win the state’s early offshore wind procurement rounds will want to purchase capacity interconnection rights (CIRs) to connect their arrays to electrical grid infrastructure at retired generators, rather than build costly new power lines.
Denmark’s Orsted, whose Ocean Wind won New Jersey’s initial 1.1GW tender in June 2019, has already done this by securing regulatory approvals to connect the array at either central or southern New Jersey landfall connection-points near the f ormer 450MW BL England coal-ﬁred and 619MW Oyster Creek nuclear plants.
Orsted, the US industry’s early pacesetter, is studying what grid infrastructure upgrades will be necessary at both locations. This expense is not part of the levelised net offshore wind renewable energy credit (OREC) price of $46.46/MWh that is ratepayers’ project subsidy.
In awarding Ocean Wind, the Board of Public Utilities (BPU) did approve cost allocation for onshore project-related transmission, Still, Orsted is responsible for the initial $10m, $84m of the next $120m and 50% for any additional costs up to $174m. Only then, would ratepayers pay full upgrade costs.
All this cost is in addition to the expense of subsea transmission – Ocean Wind is located about 24km off the seaside resort of Atlantic City – that the developer must bear.
New Jersey with a 7.5GW offshore wind goal plans 1.2GW procurement rounds this year and in 2022 and 2024, and 1.4GW in 2026 and 2028. Among states, only New York’s mandated 9GW is larger.
New Jersey has a 50% renewable energy goal by 2030 and aims for 100%-zero emission energy by 2050.“States on the east coast have put out big targets. One of the main ingredients to capturing that end goal is making transmission happen,” Joris Veldhoven, commercial and ﬁnance director at EDF-Shell joint venture Atlantic Shores, told the conference.
Atlantic Shores holds development rights to a lease area in federal waters with 2.5GW potential capacity off New Jersey’s central coast. Orsted’s zone to the south has 3.5GW potential, according to federal government estimates.
Veldhoven said there is “lots of discussion ongoing” at both Atlantic Shores and its parent companies about project-speciﬁc transmission and grid issues in the broader sense as it relates to the New Jersey – New York region’s offshore wind development ambitions.
Developers expect the project or projects awarded 1.2GW capacity in New Jersey’s upcoming procurement to likely tie into two other potential near- shore sites south of Oyster Creek that state energy planners have identiﬁed.
Like Orsted’s Ocean Wind, individual radial high-voltage alternating-current (HVAC) subsea cables will be employed to export the electricity.
“The bigger question is, ‘What happens after this next round because interconnection is getting harder and harder?’ ” asks Vendhoven. “Upgrade costs will be higher and higher At the same time, climate change is real. It is there and states will want to act.”
“Whatever transmission solution we can offer at Atlantic Shores, we will be put to the test whether that can really work by the ﬁnance community and frankly by everyone. Because at the end of the day, if the power does not ﬂow to the ratepayers of the states, it’s everyone’s problem.”
Glatz is urging developers of wind projects and any that may want to build a merchant transmission grid offshore to place them in PJM’s interconnection queue once they have site control from the Bureau of Ocean Energy Management (BOEM), the federal agency that regulates sector activity on the outer continental shelf beyond state territorial limits.
Once there, offshore projects must compete with those onshore for available grid capability and obtain injection rights.
“It’s kind of an incremental type basis where you are looking at one project on top of another and what additional transmission might be needed to accommodate this next project. What will be the least cost way to do that?” she said.
The current interconnection process which PJM and other grid operators run basically requires developers to make an educated guess on where they want to tie into the onshore grid.
Then the grid operator evaluates the proposed interconnection and comes with the costs to accommodate that. “It’s a little bit of guesswork that results in the developer paying for those interconnects,” said Stephen Wemple, general manager of the Utility of the Future initiative at Consolidated Edison in New York City.
The big unknown – and risk – for the offshore wind industry in New Jersey is whether the onshore transmission upgrades that are seen today are being necessary can get done to keep pace with build-out of capacity the state wants.
Grid modernisation will require coordination between sector developers, PJM and the state with input from various stakeholders. Experience has shown that building power lines in land-constrained states like New Jersey is anything but easy.
Consultancy Wood Mackenzie in a Tuesday report cautioned that recent large-scale renewable energy-focused transmission projects “have failed to move forward due to a combination of permit delays, Nimbyism and high network upgrade costs”. (Copyright)