Google-Backed Offshore Wind-Powered Grid Gains Traction

As overall efforts lag off the Jersey coast, a federal agency approves Atlantic Wind Connection’s transmission plans pending environmental impact statement

The Atlantic Wind Connection, the Google-backed plan to build an offshore wind transmission system off the Eastern seaboard, continues to move forward even as efforts to develop wind farms off the Jersey coast lag.

The U.S. Department of Interior yesterday announced there was no competitive interest in using certain areas of the Outer Continental Shelf to build a backbone transmission system 12 to 15 miles off the coasts of New Jersey, Delaware, Maryland and Virginia.

The declaration means the Atlantic Wind Connection (AWC) project, a system spanning about 300 miles, will avoid delays associated with an auction if there had been competitors seeking to secure the same right-of-way on the shelf. AWC officials say it could shave one year off the time it takes to develop the project.

With approval by the federal agency, the project can move forward with its permitting process, in contrast to what is happening in New Jersey where up to 11 separate developers have expressed interest in building offshore wind farms off the coast.

“This decision is an important step to advancing what could be the world’s first integrated electric transmission superhighway for offshore wind,” said Bob Mitchell, chief executive officer of AWC. Backers of the project say it is necessary to build a robust offshore wind industry off the coast.

Environmentalists have a different view.

“We may end up with a power line going forward even before we have any wind farms,” said Jeff Tittel, director of the New Jersey Sierra Club. Noting the project has a price tag exceeding $5 billion, he argued the money would be better spent on developing wind farms off the coast.

Mitchell said that is not accurate. “The line will never be built if there is no offshore wind farms,” he said. Mitchell also said the cost of building the transmission line amounts to pennies for consumers. “It’s a smart public policy decision,” he said.

The AWC project also won special incentive rates from the Federal Energy Regulatory Commission, which include being able to collect rates from electric customers before the project is operational, provided it wins approval from the PJM Interconnection, the regional operator of the power grid.

AWC executives argued if their transmission system is built, it could reduce the cost of offshore wind by 25 percent by easing congestion on the existing power grid, a problem that spikes electric bills, particularly for New Jersey consumers.

The effort to develop offshore wind farms in New Jersey, however, is moving slowly. The state enacted legislation to help finance the offshore wind farms with ratepayers’ subsidiaries, similar to how New Jersey has promoted solar power. The rules have not yet been adopted by the state, a source of frustration to the handful of offshore wind farms proposed off the coast.

Greg Reinert, a spokesman for the New Jersey Board of Public Utilities, which is working on the rules, said they could be presented to the agency sometime in June or July. If the board approves the proposed regulation, it would then be published in the New Jersey Register and subject to public hearings that could extend to the end of the year.

Even if the state moves forward more swiftly, prospects for offshore wind may be hindered by the cheap price of natural gas, which has idled many coal plants, a far less expensive way of producing electricity than offshore wind farms.

If gas prices rise and coal plants are called upon more often to produce electricity, Tittel fears the offshore backbone transmission system will wheel dirty coal power from the south up to New Jersey and other parts of the metropolitan area.

In addition, the offshore wind farm developers have a steep hurdle to clear before their projects are approved by the BPU: They must demonstrate the proposal has a net economic benefit for the state. The first project to come before the agency failed to meet that standard, according to a consultant hired by the New Jersey Division of Rate Counsel.

All of those factors have some Statehouse observers privately predicting no offshore wind farms will ever be built off the Jersey coast, although none will talk publically about it for fear of offending the Christie administration. The administration’s new energy master plan promotes offshore wind development as a means of creating well-paying jobs in the manufacturing sector.

Mitchell says he has heard no talk of a lack of commitment by the administration. “We are anticipating New Jersey will have an offshore renewable energy program,” he said.

The next important step for the project is convincing states to support its effort to be included in PJM’s regional transmission planning, Mitchell said. If so, it would send a signal to the project’s investors to keep investing in the proposal.