Creating a Cost-Effective Offshore Wind Power Grid & Transmission Infrastructure: What are the practicalities?

The following is a transcript of a speech given by Bryan Sanderson, Senior Vice President, Anbaric Transmission at the Offshore Wind Power USA conference held February 2014 in Boston, Ma.

Good morning, and thank you for giving me the opportunity to stand up here and opine for a few minutes on offshore transmission.

Before I do that, for those of you not familiar with Anbaric Transmission, I’d like to take a couple of minutes to give you a little background about us. We are an independent company that has been behind two successfully developed HVDC Projects – the Neptune Regional Transmission System, and the Hudson Transmission Project. Each of these are 660MW HVDC connections from PJM to Long Island and Manhattan respectively, and each were awarded through competitive RFP processes. As an independent, each of our projects must rest on its fundamental economics.

We have a few other projects in our pipeline:

  • Green Line: The Green Line will be a 1000 MW HVDC tie from northern Maine into the greater-Boston area, designed to connect remote wind resources to load.
  • Grand Isle Intertie: The GII will be a 400 MW connection from Plattsburgh, NY into Burlington, VT – like Green Line, the goal of this project is to connect incremental wind resources into the ISO-NE market.
  • Poseidon: Poseidon is very similar to Neptune – bringing 500 MW of power from central NJ to Long Island.
  • And lastly, the Bay State OSW Tmx System

I think the title of this session was well chosen – “Creating a Cost-Effective Offshore Wind Power Grid & Transmission Infrastructure: What are the practicalities?” I say this because the practicalities may dictate that best offshore grid we can build right now may not the most cost effective on the basis of $/MWh delivered, nor the most elegant from a technical or engineering perspective, nor the most robust platform for connecting thousands of megawatts of offshore projects. But for now, that’s OK – we need to start somewhere.

Julia and her colleagues at Green Power Conferences have asked us to comment on several areas within this broader subject – a few of which are:

  • Trends in development and financing
  • The cost implications of creating the ‘right’ transmission infrastructure
  • Whether offshore transmission should be financed independently or as a backbone; and
  • What innovations could the US adopt from the Europeans

I’ll try to address each of these – at least tangentially – through the story of our own Bay State Offshore Wind Transmission System.

At Anbaric we first started thinking seriously about creating an offshore transmission grid in 2009. During our initial planning, we recognized the inefficiencies of running dedicated transmission lines from each project to the shore, and the conflicts that would likely arise as multiple projects tried to connect into the limited subset of landing spots that are environmentally, electrically, and economically desirable. We looked for other industries that might have these same challenges, and thought offshore oil & gas might be a good model – there are thousands of oil & gas platforms in the Gulf of Mexico, and they share a handful of highly networked pipeline systems to move their products to shore. Well, it turns out that oil & gas is quite a mature industry with deep and liquid markets for their products, which happen to carry good margins, and those pipeline systems weren’t built overnight.

POINT 1: The practical cost-effective grid must be sized to meet the needs of the industry it’s meant to service. In the current world – where offshore wind does not compete on a $/MWh basis with available on-shore resources – the pace and size of development will be determined by policy, and we’ve yet to see any policy that truly supports the large-scale deployment of offshore wind, and by policy, I mean financeable contracts.

So, we sat back for a bit to see where policy would lead. Between 2009-2011 we saw BOEM take a more proactive role by designating the wind energy areas and beginning the leasing processes. The state of Massachusetts had released its Ocean Management Plan and held an RFI for both offshore wind and transmission, and had stated a goal of developing up to 4000 MW of offshore wind. This represented some progress. Though we still liked the idea of building a networked system to bring thousands of MW of wind to shore, we recognized that the costs to do so in advance of the generation would be prohibitive and unlikely to win political favor.

POINT 2: Offshore transmission is expensive, and financing it will require a commitment by somebody to pay for it – either the wind generators themselves, the RTO’s through a FERC-Order 1000 public policy mechanism, or the states through some vehicle to be determined. As an independent transmission developer, the one question we ask ourselves every day is “who is our customer?” The answer to this question will determine the transmission system that gets built. Financing by the generators will almost guarantee a series of radial interconnects. Only through some sort of broader cost allocation can larger, more efficient grids be developed, and these require planning.

So we revised our plans from a networked system to two 1,000 MW radial interconnections into southeastern Massachusetts, each of which could accommodate multiple farms. This meant that we A) could build at a scale large enough to capture economies of scale, B) avoid the technological risk of implementing a network, and C) could build in phases, timed along with the wind farms, reducing the risk of stranded costs.

Well, a couple more years have passed since we filed the above plans with ISO-NE, and we’ve yet to see the concrete policies put in place that could support both offshore generation and transmission.  There is hope that the actions by the Maryland Governor and Legislature and the recent coordination among the New England Governors and NESCOE will lead to something positive for the industry. But I suspect that in the near term, this will mean hundreds of MW deployed, not the thousands we’ve all been hoping and working so hard for.

This brings me to my THIRD POINT: The optimal offshore grid will also be an evolving system – if the industry starts with smaller, isolated projects, it makes sense to build a smaller, project specific grid. But as the industry develops and we begin to see thousands of real MWs on the horizon, then we can start to talk about big integrated systems. Anbaric remains flexible in its approach, and we’re happy to build whatever system is optimal for the wind projects that will be built.

Lastly, the question was asked “What innovative approaches could the US take from Europe and the supergrid?” My answer is not a technical one, but rather “get the policy right to support the industry for the long term.” This is no longer a science experiment – it works. Let’s do it. Once we begin to build actual projects on a sustained basis, engineers and entrepreneurs will have incentive to tackle the hard problems and bring innovation.

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