$5 Billion Plan to Build First Offshore Power Transmission System

Some offshore wind players argue a big-ticket transmission backbone would only drive up the cost of delivering power to customers

The nation has yet to build its first offshore wind farm, but that fact isn’t preventing some deep-pocketed investors from backing a $5 billion offshore transmission system that would serve much of the eastern seaboard, including New Jersey.

The project, involving a 350-mile long underwater transmission line stretching from Virginia to New Jersey, aims to tap into the vast wind potential identified off the coast. It also is looking to capitalize on the twin goals of the eastern states, to promote renewable energy sources and decrease their dependence on fossil fuels.

Its backers say the proposal could be the “spark” that paves the way for a new industry, one with the potential of thousands of new jobs along the East Coast. They also said it could reduce project costs for the proposed wind farms off the Jersey coast by cutting transmission needs, a claim disputed by some developers.

Undersea Transmission Backbone

There are four developers currently seeking approval to build more than 1,100 megawatts of wind capacity off the New Jersey coast. The proposed undersea transmission backbone would be capable of carrying 6,000 megawatts of power, enough to serve 1.9 million homes, according to Robert Mitchell, CEO of Trans-Elect Development Corp., an independent transmission company based in Chevy Chase, MD, which would build the backbone.

There are many uncertainties about the project, not least the $5 billion price tag, which probably ultimately would be borne by electric customers. Mitchell said he hopes the project is underway by 2013 and operational by 2016. If so, the project could begin before any offshore wind farms are operating, a fact that likely would lead to cheap coal power being carried by the transmission system from the South into the Northeast.

Mitchell conceded some coal power likely will move along the backbone, but argued environmentalists he has consulted would consent to that tradeoff because of the potential of tapping renewable energy off the coast. The federal government projects a potential of 60,000 megawatts of offshore wind capacity along the eastern seaboard.

Without the backbone transmission system, the regional power grid would probably not be able to handle any new offshore wind projects after an initial 1,000 megawatts are deployed, according to backers.

Google Power

The backers, which include Google, Inc., are providing the initial investment for the Atlantic Wind Connection project developed by Trans-Elect Development Corp.

The project drew mixed reviews from the four developers of offshore wind farms in New Jersey, none of which are close to commencing construction. They also disputed the need for the backbone project to advance new offshore wind farms.

“With a project this costly, we must first ask, what problem is this project trying to solve?” asked Scott Jennings, president of PSEG Global, which is proposing to build a $1 billion offshore wind farm with Deepwater Wind in South Jersey. He argued that the transmission backbone system could end up transporting more coal power than wind power and slow down permits for projects under development.

“Transmission is not an obstacle to currently proposed projects,” Jennings added. “Each project already has a transmission plan, is including the costs for the radial lines in their project plans and is ready to move forward on that basis. The transmission spine adds a layer of cost, time and complexity. It simply is not needed for the projects currently being developed nor for the next several thousand megawatts that could be deployed.”

Erich Stephens, of Offshore MW, which wants to build 360 megawatts of offshore wind capacity 14 miles off the Jersey coast, agreed. “These projects can move forward with or without this backbone,” said Stephens, who also questioned claims by Atlantic Wind Connection that its project would save consumers money in the long run.

Concerns About Costs

With some consumer advocates already questioning whether the state’s aggressive solar and wind goals are driving up already steep energy bills for customers, some of the offshore wind developers also expressed concern about the cost of a project that they argue may be unnecessary.

“The cost of this proposal is many times greater than all of the interconnection costs of currently proposed projects,” Jennings noted. “Our objective is to build these offshore wind projects in the most cost-efficient manner that we can and, for the industry to move forward, we need to make sure customers are not burdened with unneeded expenses.”

NRG Bluewater Wind, however, was more encouraging. It is developing wind farms off the coasts of Delaware and New Jersey. “The region offers excellent conditions — strong, constant winds, shallow waters and close proximity to major population centers,” the company said in a statement. “A backbone that ties offshore wind projects together to make offshore wind more viable and reliable is worth exploring.”

Atlantic Wind Connection needs approval from various governmental and other agencies, including the Federal Energy Regulatory Commission. PJM Interconnection, which operates the regional power grid covering the East Coast out to Chicago, also must give its blessing. Mitchell said the project developers anticipate their biggest hurdle will be getting PJM’s approval.