US faces ‘grand challenges’ integrating offshore wind

The US faces numerous challenges integrating offshore wind into the grid, not least because of the huge scale of projects now being proposed and the age and limited capacity of the existing transmission network.

As Power Advisory president John Dalton told a recent webinar, “interconnection is already one of the most significant project risks,” and in Mr Dalton’s view – and in the view of others in the industry – a co-ordinated approach to transmission system development could be the key.

The trouble is, that is not a view commonly held by generation developers, who are planning to install their own export facilities to bring electricity ashore in the first round of projects in the US.

“Generators have strong incentives to undertake interconnection themselves, says Mr Dalton, “and to reduce the costs they incur in doing so to a minimum. The problem is this can result in inefficient transmission system development in aggregate.”

If generators build their own lead lines for every project, it is argued, the seabed in certain areas will become congested, the environmental issues will be significant and it will result in permitting being sought repeatedly for lead lines using many of the same corridors.

How much better might it be if states took the lead and appointed transmission system developers to build a ‘backbone’ into which generation developers could feed the energy from their windfarm?

It is also argued that endless lead lines from generators could result in stranded interconnection capacity. “If you have a point of interconnection that can accommodate 1,200 MW but a project that only needs 800 MW, 400 MW of precious transmission capability is lost,” Mr Dalton argues.

He suggests that more efficient build out of transmission infrastructure could be possible if a more centralised approach is adopted. Co-ordinated offshore wind transmission development could reduce potential environmental impacts, make permitting for projects more straightforward and reduce the number of required landfalls. The problem is, he notes, this could lead to misalignment of project schedules and the risk of ‘overbuild,’ as it seemingly has in some countries.

A co-ordinated approach is just what some transmission system companies believe to be the answer. Anbaric president of Connecticut OceanGrid Peter Shattuck tells OWJ that although in what he called Phase 1 or the first round of offshore wind development in the country generation developers would do the transmission work themselves, for phase 2 and subsequent rounds of development, states need to find a more efficient way to bring huge amounts of power to land.

“The sheer size of the projects on the east coast is causing a lot of questions to be asked about how states are going to do that,” Mr Shattuck says. “Most of the developers in the US want to maintain control of transmission, it’s financially important to them to do so, but it is really important to choose routes that are efficient and avoid sensitive areas and fishing grounds.

“At the moment, the states all think differently about solutions to these issues, but Anbaric believes a solution like our Southern New England OceanGrid – an independent, open-access offshore transmission system designed to maximise the region’s offshore wind resources – is a much more efficient way to deliver that power to shore.”

Anbaric believes the benefits of its approach include greater efficiency, more reliability, fewer environmental impacts, and the ability to direct the energy to specific areas or cities in need of it.

The trouble is, that as Transmission Investment managing director Chris Veal told the webinar, although co-ordinated development of transmission assets is theoretically beneficial, experience in Europe has not necessarily demonstrated that to be the case. What is more, he says, in Germany, where a co-ordinated approach was adopted, transmission costs are double those in the UK, where it was not.

Despite the German experience, Mr Dalton believes there might be other benefits associated with co-ordinated development of transmission systems, not least that it might help increase competition among generation developers and create a level playing field. “Co-ordination would reduce a developer’s ability to use transmission access as an advantage,” he says.

“At the moment, the transmission queue rewards first movers. If we were to level the playing field, that might support more price competition, and reduce the cost to consumers. But the downside is that, as in Germany, sometimes projects have been developed but the transmission system hasn’t been ready on time and generation developers have had to forego revenues.”

Burns & McDonnell regional managing director Kent Herzog told the webinar there was little doubt that the first wave of projects would be developer-led, but says he believes the finance community “may have a say” in transmission system development for the next round of projects and a ‘hybrid’ model might yet emerge.

At the heart of the problem, Mr Herzog says, is that the US does not have an overarching energy policy like European countries where offshore wind has taken off. Energy policy is state led, and there is a complex web of regulatory oversight as a result. That greatly complicates efforts to think strategically about transmission system development in the US. It means policymakers and officials in states are tasked with addressing the issues and, by implication, do so in isolation.

Mr Herzog says it is also highly unlikely states in the US would appoint a monopoly transmission system operator, as is the case in Germany and the Netherlands, but transmission system providers in some states might yet be identified by a competitive process.

It is also possible that as the size and scale of the market in the US ramps up, generation developers with transmission experience might create pureplay transmission outfits who would bid in response to competitive procurement of transmission facilities.

Tufts University professor of civil and environmental engineering Eric Hines agrees with Mr Shattuck that the scale of the second round of offshore wind projects in the US is such that it will really need a joined-up approach and ‘strategic’ thinking about transmission infrastructure.

Although very limited in scale, the first signs of that kind of approach include a solicitation from the Massachusetts Department of Energy Resources seeking input on whether offshore wind transmission should be tendered independently of generation.

Professor Hines says the solicitation was a ‘healthy process’ but limited to consideration of transmission infrastructure for 1,600 MW of generation. “The process has yielded a conversation, but not a consensus,” Professor Hines says, “and in the scale of things on the east coast, 1,600 MW is no longer a large number.”

Mr Dalton says Mass DOER’s approach would be a good market test of the value offered by independent transmission, but agreed the framework was significantly constrained by the scope of the transmission and the requirement that it be ‘cost effective’ but not seemingly consider the non-price benefits of such an approach.

The other promising discussion Professor Hines cites is around ISO New England’s plans to replace the Mystic generating station. In December 2019, the grid operator sought proposals for what is its first competitive transmission system solicitation. It says it is seeking ‘creative’ solutions to meet transmission needs ‘that are not time sensitive.’

Replacing generation from the Mystic facility with offshore wind power might be a solution, and proposals have already been submitted that would allow the expected energy shortfall in the greater Boston area that will arise as a result of the retirement of Mystic to be met by clean energy resources, such as offshore wind.

“States are recognising that we now have a huge aggregate amount of power being developed off the east coast, and that we need co-ordinated offshore and onshore networks to bring that power ashore,” Professor Hines tells OWJ.

“It’s as important a challenge in the offshore wind market as establishing supply chains and preparing US ports and vessels. Points of interconnection that will enable offshore wind energy to be brought ashore are extremely valuable resources. States and the region as a whole need to think strategically about how to handle points of interconnection.”

However, Professor Hines tells OWJ that, in his view, huge as the amount of offshore wind is that needs to be integrated into the grid by 2030 might be, a much larger challenge is looming.

The most important reason the US needs to think strategically about transmission infrastructure for offshore wind is not the 30 GW pipeline of projects on the east coast, but the effect of states’ recent commitments to carbon neutrality by 2050.

“Everyone is focused on getting the first commercial-scale project in the water. That is key. The US offshore wind pipeline has grown exponentially in the last couple of years, with states purchasing over 7 GW in 2019 alone. That is good news.

“Nevertheless, if net zero targets are going to be met, we will need much more offshore wind by 2050, more like 300 GW. That amount of offshore wind simply can’t be integrated into the grid without a clear vision for the future of offshore and onshore transmission.”

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