PJM offshore wind offshore wind transmission proposal could serve as regional blueprint

Source: By Jared Anderson, S&P Global • Posted: Monday, January 31, 2022

PJM Interconnection and the New Jersey Board of Public Utilities’ novel offshore wind development plan could serve as a regional blueprint for building offshore wind transmission, including a potential backbone design, executives said Jan. 28.

PJM filed a first-of-its-kind joint agreement with the Federal Energy Regulatory Commission (ER22-902) Jan. 27 that details how the grid operator will evaluate electric transmission projects proposed in response to New Jersey’s offshore wind target of building 7,500 MW of offshore wind generation capacity by 2035.

The filing was made under a special “State Agreement Approach” provision in PJM’s tariff, which allows states to solicit proposals with specific public policy goals in mind. PJM’s regional transmission expansion plan is typically driven by reliability or market-efficiency criteria.

“This is really going to help support reliability,” Ken Seiler, PJM’s vice president of planning said in a Jan. 28 phone call.

“We’re excited to interconnect these facilities,” Seiler said, adding that generation typically flows from the west to serve load centers in the east and this proposed plan will provide generation in the east, allowing PJM to serve coastal states more reliably.

The state agreement approach has been on the books for a few years, and this is the first time it is being used, he said.

Given that other PJM states like Maryland and Virginia are pursuing offshore wind development, if New Jersey’s plan goes smoothly, the approach could be used elsewhere.

“This proceeding is being watched and analyzed by others and the approach could be used as a blueprint for other states,” Asim Haque, PJM’s vice president of state and member services, said.

“We have had conversations with other states and will see if other states seek to use it,” Haque said.

The state agreement approach was discussed at a recent meeting of the task force on transmission led by the National Association of Regulatory Utility Commissioners and FERC, he said.

PJM said in October 2021 that it received 80 proposals under the state agreement approach for onshore and offshore wind transmission facilities that can help New Jersey meet its offshore wind target.

Existing transmission owners and merchant developers submitted the proposals, 57 of which include commitments to cap costs, PJM said. Forty-five of the proposals ask to upgrade existing onshore transmission facilities, 22 propose new transmission interconnection facilities, 26 propose new offshore transmission interconnection facilities, and eight of them propose offshore transmission networks.

Offshore wind transmission backbone

One of the main uncertainties regarding US offshore wind development that can lead to variations between compensation structures is whether the transmission component is included. This is partly because there is still debate among market participants, developers, and regulators regarding the optimal transmission solutions for individual projects and regionally as more offshore wind farms are built.

Merchant transmission developers tend to favor the creation of an offshore wind transmission “backbone” that could serve as a nexus where multiple projects would plug in before one or more larger transmission lines bring the power onshore.

But some states are largely pursuing their own plans without broad regional coordination and projects are currently being developed in an ad hoc nature, raising the possibility of a spaghetti-like configuration where each wind farm individually connects to the onshore power grid.

PJM and NJBPU have asked developers to propose the “optimal mix of onshore and offshore transmission facilities that provide the most economically efficient and reliable way of delivering power from offshore wind turbines,” according to an NJBPU statement.

Each proposal includes “ready-to-build offshore wind transmission solutions” to deliver offshore wind power to the existing power grid, the NJBPU said.

This approach will address the transmission backbone issue, Ken Seiler said.

Abe Silverman, the NJBPU’s general counsel, said on Twitter Jan. 27 that the “filing establishes the legal framework for building transmission under PJM’s State Agreement Approach/FERC Order 1000, including providing legal protections for New Jersey customers and ensuring that all future users of the offshore wind backbone enjoy the benefits of open access.”

PJM expects to make a recommendation regarding the most efficient and cost-effective transmission proposal or proposals to New Jersey by May. The state and PJM will hold discussions over the summer and New Jersey is expected to decide which projects to support by September.