Interior announces progress on Atlantic transmission ‘backbone’

Source: Phil Taylor, E&E reporter • Posted: Tuesday, May 15, 2012

The Obama administration is moving forward with a transmission project to connect several thousand megawatts of offshore wind energy in the Atlantic Ocean, after confirming that there is no competitive interest from other developers.

Interior Deputy Secretary David Hayes today announced that Atlantic Grid Holdings LLC is the only firm interested in building a 300-mile high-voltage transmission line from New York to Virginia, clearing the way for the agency to initiate an environmental review.

The line known as the Atlantic Wind Connection would be buried in the seabed and could accommodate up to 7,000 MW. It would follow the path of Interior’s four designated wind energy areas to connect multiple offshore wind farms to the strongest portions of the onshore transmission system.

“The first-of-its-kind Atlantic Wind Connection is an encouraging sign of significant industry interest in developing the infrastructure to support offshore wind development,” Hayes said in a statement. “It’s the type of project that will spur innovation that will help us stand up a clean energy economy to power communities up and down the East Coast.”

Today’s announcement comes more than a year after the $6 billion project — which is backed by Google Inc., Good Energies II LP, Marubeni Corp. and Elia — filed a first-ever unsolicited right of way application with Interior’s Bureau of Ocean Energy Management (Greenwire, March 31, 2011). The lack of competitive interest allows Interior to forgo a potentially lengthy auction, the company said.

The developer now has up to two months to file a general activities plan that will likely be vetted through an environmental impact statement, Interior said. The company said its plan will detail the first phase of its project, which is expected to cost about $1.7 billion. Full construction of all phases of the project is expected to last about a decade, the agency said.

By tying several wind farms together — as opposed to using separate “radial” transmission lines — AWC hopes to relieve congestion and compensate for the intermittence that has hampered renewable energy development

“Compared to each wind farm building its own transmission lines, our project is the most affordable, efficient and environmentally sensitive solution for connecting offshore wind,” Markian Melnyk, president of AGH, said in a statement.

The developers have already surveyed nearly 10,000 square miles of waters to evaluate the marine environment, seafloor conditions, conflicting uses, wrecks and obstructions, cable and other infrastructure crossings, protected species, cultural resources, geological hazards and public safety, developers said.

The transmission project still faces significant permitting hurdles — namely convincing the PJM Interconnection, the mid-Atlantic’s largest grid operator, that it deserves to be included in PJM’s list of approved transmission projects.

A Federal Energy Regulatory Commission order approved in July, which directs transmission system operators to consider not just economic benefits to consumers and grid reliability but also public policy goals such as state renewable energy standards, could brighten AWC’s prospects, experts inside and outside the company have said (ClimateWire, Oct. 21, 2011).

Interior’s announcement comes three months after the department said it had completed an environmental assessment clearing the way for wind energy leases as early as this year off the coasts of Maryland, Virginia, Delaware and New Jersey (Greenwire, Feb. 2).

While several offshore wind farms are under way in Europe, no commercial projects have broken ground in the United States, where developers face high capital costs, wary investors and the expiration of key federal tax incentives. In addition, the Energy Information Administration estimates that the “levelized” cost of offshore wind for projects built in 2016 will average $243 per megawatt-hour — nearly two-and-a-half times more than onshore wind.

For Cape Wind Associates LLC, which is developing what could be the nation’s first offshore wind farm off the coast of Massachusetts, regulatory costs and litigation have accounted for more than half the project’s total costs, James Gordon, the firm’s president, said last June.

Hayes today reiterated a call President Obama made last week for Congress to extend the production tax credit, which expires at the end of this year for the wind industry, as part of a broader “to-do list” for creating jobs (Greenwire, May 8). “I know this is a significant factor for Cape Wind,” said Hayes, who did not predict a date for the first wind farm to be built. “It’s a significant factor for any and all of these companies.”