The state is joining with the nation’s largest electrical grid operator to try to answer one of the big questions in offshore wind: how to bring the power from wind farms to customers at an affordable cost.
The agreement with PJM Interconnection, a regional grid operator the state has often battled with in recent years, will allow the New Jersey Board of Public Utilities to open a competitive bidding process early next year to build transmission facilities for future wind farms.
Such an arrangement is viewed by state officials as potentially a more cost-effective and environmentally benign way of bringing the wind energy ashore. It could also result in the building of an offshore wind transmission backbone that would allow developers to wheel power to where demand is the highest, one of the biggest disputes in advancing the sector.
Costs of coming ashore
The issue of transmission costs — the expense of bringing electricity onshore and the upgrades needed to the current transmission systems to accommodate more power on their lines — is one of the biggest unknowns in offshore-wind development. The solution has big implications for ratepayers, who will pay for those farms.
A study earlier this year by the Business Network of Offshore Wind projected if all of the offshore wind farms proposed in New Jersey and four other coastal states are built, it would result in offshore transmission costs of between $15 billion and $20 billion.
For years, some companies have advocated building an offshore backbone wind-transmission facility, including a Google-funded initiative for one stretching from Virginia to New Jersey. Without support from states, however, the project has been shelved, although other companies have proposed building it.
In New Jersey, the state’s first offshore wind farm will be a 1,100-megawatt facility off Atlantic City developed by Ørsted. The company will build its own interconnections with onshore transmission facilities, a model to be used in next offshore wind solicitation later this year.
State officials said the new approach will help ensure New Jersey achieves the goal of 7,500 megawatts of offshore wind energy by 2035. “By exploring offshore wind transmission options … we’ll work collaboratively with PJM to identify potential solutions that meets the state’s needs and ensure the best value for ratepayers,’’ said BPU President Joseph Fiordaliso.
At this time, there will be no financial impacts to ratepayers, officials said. But if the state decides to move forward, the costs associated with the project would fall on New Jersey ratepayers.
Addressing three issues
The BPU’s order directs staff to work with PJM to seek potential solutions for three related transmission issues — onshore upgrades, beach crossings with offshore platforms to collect energy from multiple wind farms and an ocean wind-transmission backbone.
The order also identifies four locations in the state where the board recommends PJM plan to inject offshore wind power into four substations on its systems between 2028 and 2035. They include at the Cardiff substation in southern New Jersey; Larrabee in central New Jersey; Smithburg, also in central New Jersey; and northern New Jersey. All of those substations will need reinforcement to accommodate the Murphy administration’s goals of 7,500 MW by 2035, according to the board order.
The move was generally welcomed by clean-energy advocates and companies seeking to participate in the push to develop offshore wind.
“These are conversations New Jersey needs to have,’’ said Doug O’Malley director of Environment New Jersey and a big advocate for offshore wind. “The BPU is doing its homework: What is the best option for offshore wind?’’
Anbaric Development Partners, a developer of electric transmission projects, also praised the state, saying the decision vaulted New Jersey into a national leader in offshore-wind development.
“With today’s decision, BPU has made clear that in order to reach that 7,500 megawatt goal by 2035, the state must prioritize a planned transmission system that can scale the industry in an economic and environmentally sound way,’’ said Janice Fuller, president of Mid-Atlantic, a company subsidiary.