East Coast focuses on offshore wind transmission | Bracewell LLP


Many east coast states buying offshore wind are now turning their attention to solving the challenges of interconnecting this important resource. While some states, like New Jersey and New York, are working independently to figure out how to effectively interconnect offshore wind projects, New England states have come together to look at these issues collectively. The three Eastern States initiatives discussed below aim to explore and develop the interconnection-related policies and infrastructure needed to effectively achieve their offshore wind objectives.

New England States Transmission Initiative

Recently, a group of New England state agencies, called New England Energy Vision (“NEEV”), announced the New England States Transmission Initiative (“Initiative”). The Initiative focuses on exploring investments in transmission infrastructure to integrate clean energy resources with a particular focus on integrating offshore wind generation.

As a first step, NEEV has issued a Request for Information (“RFI”) seeking comments (by October 14, 2022) from electric transmission developers, offshore wind developers and other interested stakeholders on the best way to integrate offshore wind generation into a cost management system. effective, reliable and efficient manner. The RFI also includes an exhibition on the Modular Offshore Wind Power Plan (“Plan”), which is intended to serve as a draft conceptual framework for the integration of offshore wind into the grid of the New England. The plan envisions an approach “scalable, cost-effective and flexible enough to accommodate up to 8,400MW from current and future New England leases,” divided into 1,200MW increments for implementation through 2040. The plan calls for transmission solutions to be designed to integrate future transmission lines via shared landing points. The plan explicitly highlights Bridgeport, Connecticut and Boston, Massachusetts as potential interconnect points based on initial assessments, but cautions that other landing locations may also be suitable depending on transfer capacity and design considerations. ‘location.

The RFI invites comments on the development strategies and plan, including comments on the optimization of federal funding, the implications of different engineering solutions and ownership structures, the impacts of offshore wind on the reliability of the network, limiting impacts on taxpayers, identifying interconnection points for offshore wind and identifying offshore cables. routing options.

NEEV intends to take information from the RFI to inform each state’s renewable energy planning and future procurement efforts; as such, responses may inform future RFPs. For its part, by October 15, 2022, Rhode Island is expected to issue a final solicitation for 600 to 1,000 MW of offshore wind generation. The draft RFP published on September 6, 2022 contemplates that successful bidders undertake to use commercially reasonable efforts to negotiate a transmission service agreement with the owner of any regionalized offshore transmission facility that becomes available prior to the date of commercial exploitation of the project.1

New Jersey State Agreement Approach

The PJM Interconnection, LLC (“PJM”) tariff incorporates a transmission planning and cost allocation mechanism – the State Agreement Approach (“SAA”) – which allows States, individually or jointly , to ask PJM to solicit and evaluate transmission expansion on its behalf. or improvement projects that align with public policy goals set by the state. These solicitations are developed in coordination with the sponsoring state(s) (“Sponsor”), and responsive proposals are evaluated by PJM and presented to the Sponsor. The sponsor then selects a project or projects to meet its needs or closes the solicitation without making a selection. The costs associated with the selected projects are attributed exclusively to the sponsor.

At the end of 2020, New Jersey became the first state to seek to take advantage of the SAA. The New Jersey Board of Public Utilities (“NJ BPU”) issued an order on November 18, 2020, directing PJM to solicit proposals for projects that upgrade and expand the PJM transmission system to facilitate the delivery of 7,500 MW of offshore wind generation. In exchange, the NJ BPU agreed to pass on the costs of the transmission facilities to New Jersey ratepayers.2

PJM and the NJ BPU subsequently signed a SAA Agreement establishing a framework for the review and selection of transmission projects submitted in response to the competitive bidding process (“SAA Project”). Under the SAA agreement, PJM will notify the NJ BPU of the amount of capacity created by an SAA project. The NJ BPU then has the authority to allocate all or part of the SAA Project capacity to offshore generation resources selected through NJ’s offshore wind generation bidding processes. The SAA agreement also provides for the release of SAA project capacity to other parties subject to the party agreeing to pay a pro rata share of the total project costs. Despite some protests, FERC approved the SAA agreement and acknowledged that the agreement provided for a pro-rata allocation to potential future users and that FERC approval would be required for any subsequent allocation of SAA implementation costs. such an assignment.3

On April 15, 2021, PJM opened the competitive bidding process to seek proposals to build system upgrades to support the interconnection of approximately 7,500 MW of offshore wind power by 2035 More than 80 proposals have been submitted and PJM said it is currently evaluating these projects in coordination with the NJ BPU. The results of the solicitation are expected to be announced in the fourth quarter of 2022. Notably, New Jersey postponed its previously scheduled OREC 2022 solicitation to early 2023 to allow incorporation of any selected SAA projects.4

New York’s “Meshed Grid” Approach

At the end of 2021, the New York State Energy Research and Development Authority (“NYSERDA”) published a report entitled “The Benefit and Cost of Preserving the Option to Create a Meshed Offshore Grid for New York”. The report described an offshore transmission system consisting of connections between nearby offshore substations that would allow the transfer of electricity between the substations and then to the point of interconnection. Among other benefits, the report states that such an approach would allow access to pricing at multiple interconnection points and enhance reliability while allowing short-term projects to be developed using their already planned direct radial interconnections.

As a result of the report, the New York Public Service Commission (“NY PSC”) on January 20, 2022 issued an order directing NYSERDA to “take steps to preserve the option of the future offshore mesh network and “to include eligibility criteria in its offshore wind system. markets that would require proposals to incorporate measures to allow the project to fit into a future grid system.5 The NY PSC acknowledged that including such capability in future projects would incur additional costs, but concluded that these costs are lower than the costs associated with retrofit projects after the fact. Notably, the command does not require the mesh network to be developed, only that future projects be able to integrate into the mesh network.

Per NY PSC Order, NYSERDA ORECRFP22-1 (“RFP”) requires eligible projects to be “mesh-ready,” meaning they must be able to integrate into a network mesh transmission if and when the NY PSC chooses to exercise such an option.6 To demonstrate compliance with this directive, bidders must configure their projects to accommodate the necessary equipment to be integrated into the mesh network. The RFP and associated draft contract commits to ensuring that the economic value of a selected project is not reduced due to the implementation of the mesh network, but also requires that any additional value that accrues the mesh network implementation project is sent to taxpayers. Tenders are due on December 22, 2022. It remains to be seen whether or not the NY PSC will choose to implement the mesh transmission approach.

Go forward

The east coast states have taken markedly different approaches to offshore wind transmission. Nevertheless, each approach recognizes the growing additional cost of interconnecting and integrating additional offshore wind generation capacity and the limited availability of optimal onshore interconnectors. Each approach also recognizes that the development of offshore wind transmission offers new advantages in terms of reliability and economic development. The development of offshore wind transmission is, and will remain, a central issue and opportunity as states, including those on the West Coast, and the federal government continue to pursue ambitious offshore wind generation goals. .

1. RI PUC Docket No. 22-22-EL – The Narragansett Electric Co. d/b/a Rhode Island Energy’s Request for Proposals for Offshore Wind Energy.

2. NJ BPU File No. QO20100630 – Regarding offshore wind power transmission.

3. PJM Interconnect, LLC179 FERC ¶ 61,024 (April 14, 2022). See also PJM Interconnect, LLC, New Jersey State Agreement Approach Agreement Rate Schedule FERC No. 49, File No. ER22-902-000 (filed January 27, 2022); Press release, New Jersey Advances Offshore Wind Transmission Proposal at Federal Energy Regulatory Commission (January 27, 2022).

4. News Release, New Jersey Updates Schedule for Third Offshore Wind Solicitation (February 28, 2022).

5. Power Grid Study Recommendations Order, File No. 20-E-0197 (January 20, 2022).

6. Purchase of Renewable Offshore Wind Energy Certificates, ORECRFP22-1 (issued July 27, 2022).

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