The state of New Jersey has kickstarted coordinated grid integration of gigascale offshore wind in the US with the selection of a project proposal by a Shell-EDF-led consortium that is expected to save the state up to $3bn in transmission upgrade costs.
The New Jersey Board of Public Utilities (NJBPU) announced yesterday (Wednesday) its decision to advance the Larrabee Tri-Collector Solution submitted by Mid-Atlantic Offshore Development (MAOD), a joint venture between the two energy majors and Jersey Central Power & Light (JCP&L), a first under the so-called state agreement approach (SAA).
“No state has utilised the SAA. New Jersey is the only one, which further demonstrates the leadership role [it] has taken in offshore wind,” said Joseph Fiordaliso, NJBPU president.
The federally approved SAA established by regional transmission operator PJM allows states to incorporate policy goals as an equal factor to market efficiency or reliability when proposing grid upgrades.
Transmission concerns are top of mind for the nation's offshore wind industry, with 30GW of capacity expected to be connected by 2030, and the industry is urging action on coordinated multi-project transmission.
“This represents a landmark development opportunity in new, regulated transmission assets,” said Chris Hoenig, JCP&L company spokesperson.
The winning proposal beat over 80 bids from some of the industry’s biggest names, including renewables transmission developer Anbaric, the nation’s largest renewables operator, NextEra Energy, and an Orsted-PSEG tie up with Coastal Winds.
New Jersey opened its SAA solicitation last year with an eye towards generating efficiencies across multiple projects in line with governor Phil Murphy's executive order for 7.5GW of offshore wind capacity by 2035.
The SAA solicitation is only for 6.4GW, however, as the 1.1GW Ocean Wind 1 project awarded in 2019 is not included.
The state currently has 3.2GW of offshore wind capacity under contract, and governor Murphy recently upped the goal to 11GW.
The SAA solicitation sought proposals under four categories – upgrades of existing onshore transmission facilities, construction of new land- and sea-based power infrastructure, and the creation of an offshore grid.
A sea-based ‘backbone’ grid has long been anticipated, but the state rejected it as not providing “sufficient benefits to outweigh the costs at this time”, said Andrea Hart, NJBPU’s senior program manager for offshore wind.
A significant factor in its rejection was investment tax credits (ITC) in the US’ recently passed climate law which benefit generation projects but not transmission.
“If offshore wind generators construct the transmission necessary to bring their respective projects onshore, [they] are eligible for the 30% ITC,” generating savings of up to $2.2bn, said Hart.
The $504m LTCS proposal would see all of New Jersey’s offshore wind power make landfall at a single point of interconnection (POI) at the Larrabee conversion station.
NJBPU simultaneously approved another $575m in upgrades to existing infrastructure for a total of $1.08bn, enabling a further $900m in savings, NJBPU said.
The upgrades would be provided by JCP&L and local utilities PSE&G and Atlantic City Electric, and others.