Article
No deal on offshore power grid
NJ Spotlight News|Tom Johnson|Oct 27, 2022
The Board of Public Utilities balked at the more expensive projects needed to begin building what is essentially a backbone transmission system off the coast to deliver power ashore. Instead, it opted to wait until federal financial incentives are available to defray the costs to utility customers. A law signed by President Joe Biden this summer provides lucrative tax credits to operators of offshore wind farms, but those credits are not available to most transmission projects. Several developers had sought approval from the state to build offshore transmission lines from the wind farms to the grid.
The Board of Public Utilities balked at the more expensive projects needed to begin building what is essentially a backbone transmission system off the coast to deliver power ashore. Instead, it opted to wait until federal financial incentives are available to defray the costs to utility customers. A law signed by President Joe Biden this summer provides lucrative tax credits to operators of offshore wind farms, but those credits are not available to most transmission projects. Several developers had sought approval from the state to build offshore transmission lines from the wind farms to the grid.
Regulator waits until federal tax credits can help defray cost to customers
A state agency held off, at least for now, approving projects aimed at bringing power from offshore wind farms to land, but it did allow for $1 billion to upgrade the existing power grid.
The Board of Public Utilities balked at the more expensive projects needed to begin building what is essentially a backbone transmission system off the coast to deliver power ashore. Instead, it opted to wait until federal financial incentives are available to defray the costs to utility customers.
A law signed by President Joe Biden this summer provides lucrative tax credits to operators of offshore wind farms, but those credits are not available to most transmission …
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Regulator waits until federal tax credits can help defray cost to customers
A state agency held off, at least for now, approving projects aimed at bringing power from offshore wind farms to land, but it did allow for $1 billion to upgrade the existing power grid.
The Board of Public Utilities balked at the more expensive projects needed to begin building what is essentially a backbone transmission system off the coast to deliver power ashore. Instead, it opted to wait until federal financial incentives are available to defray the costs to utility customers.
A law signed by President Joe Biden this summer provides lucrative tax credits to operators of offshore wind farms, but those credits are not available to most transmission projects. Several developers had sought approval from the state to build offshore transmission lines from the wind farms to the grid.
Many clean-energy advocates contend a backbone offshore wind transmission system is the most cost-effective and least environmentally disruptive way of connecting offshore power to the customers who need it. By midcentury, offshore wind farms are supposed to provide 27% of the state’s electricity. No offshore wind farm is operating in New Jersey.
Future federal funds
In the board order approving the projects, BPU staff said the action positions the state to seek direct federal funding for future expansions of the offshore transmission grid, including the potential to award a full offshore-wind backbone in future solicitations.
“We’re not finished,’’ said BPU President Joseph Fiordaliso, who said the approved projects will minimize the impact on New Jersey’s coastline, avoiding multiple projects coming ashore at different landing points.
In what it billed as the first coordinated approach to bringing offshore wind power to the grid, the board approved a project proposed by Jersey Central Power & Light and Mid-Atlantic Offshore Development, the latter a joint venture of EDF Renewables North America and Shell New Energies U.S.
The project involves building a new substation at JCP&L’s Larrabee substation in central Jersey, a site designated as the single interconnection point for the initial offshore wind farms approved by the BPU. Eventually, the new substation is projected to be the interconnect for up to 6,400 megawatts of offshore-wind electricity.
Bottom line: Larrabee
The new substation at Larrabee and other upgrades there are projected to cost $504 million. Related upgrades to the existing onshore grid will add another $575 million, bringing the total cost to ratepayers of $1.08 billion, or $1.03 per month for the average residential customer.
The onshore grid upgrades will be built by Atlantic City Electric, Baltimore Gas and Electric, LS Power, Peco Energy Co., PPL Corp., PSE&G and Transource.
The state said the projects, along with upgrades to the existing power grid, will save ratepayers $900 million, compared with the costs of transmission without using a highly competitive process overseen by the BPU and PJM.
The work at the Larrabee substation is designed to limit the number of coastal landing points by various offshore wind projects. The single transmission corridor, to be built by Mid-Atlantic Offshore Development, will reduce environmental impact, disruption in communities and permitting risks, according to the BPU.
The downside to that approach is that having a single corridor heightens the risk of a failure by reducing the opportunity to have redundant lines, according to critics.
Disappointing decision
Some clean-energy advocates were disappointed the board held off creating a backbone transmission system. “It doesn’t take us where we need to go. We need to get to a backbone system,’’ said Jeff Tittel, a longtime environmental activist. “It continues the status quo.”
JCP&L said it was excited to support the state’s energy goals, but needed to see the full board order, which ran 86 pages. “This represents a landmark development opportunity in new regulated-transmission assets,’’ the company said in a statement.
Thirteen different developers submitted 80 options for addressing transmission needs of offshore wind. Some offered upgrades costing hundreds of thousands of dollars to the onshore power grid, while others proposed investments in an offshore wind transmission system costing as much as $10 billion.
“Today’s decision was bifurcated; doubling down on improving land transmission to expand future capacity for offshore wind, but pushing a decision on offshore transmission to the future,’’ said Doug O’Malley, director of Environment New Jersey.