A New York Power Authority-led study will determine the most
cost-effective means to build transmission for 2,400 megawatts of offshore wind
capacity by 2030.
European nations have together installed nearly 16,000 megawatts of offshore wind
capacity. The United States has thus far managed just one 30-megawatt project,
the Block Island Wind Farm, off Rhode Island.
Earlier this month, Governor Andrew Cuomo’s office announced that the New York Power Authority (NYPA)
would lead a study of successful offshore wind transmission models,
particularly in Europe, to determine the most cost-effective way to build
interconnections for the 2,400 megawatts of capacity to be installed off the
coast of New York by 2030.
“This came out of work both NYSERDA [New York State Energy
Research and Development Authority] and NYPA had been doing to try to
investigate how New York state can bring down the cost of offshore wind and
reach the governor’s offshore wind target, 2,400 megawatts,” Robert F. Lurie, executive
vice president and CFO of NYPA, told Greentech Media in an interview.
“In order to do that much offshore wind,” he added, “we at
NYPA felt that one of the unexplored areas for cost reduction was the
transmission part of the equation.”
According to New York’s offshore wind master plan, transmission could account for
30 percent of the total project costs of an offshore wind farm.
In July, New York’s Public Service Commission confirmed the timeline for the first phase of the
state’s offshore wind deployment. In the fourth quarter of this year, NYSERDA
will issue a solicitation for 800 megawatts of offshore wind, in coordination
with NYPA and the Long Island Power Authority. Winning bids are scheduled to be
announced in the second quarter of 2019.
According to Lurie, developers for that first 800 megawatts
of offshore wind capacity will likely be responsible for building the
transmission to connect the projects to onshore grids. But based on the
findings of the new transmission study, different models could be employed for
future projects.
“In the longer term, as we build out a much higher volume of
projects, we need to investigate other options for how to bring the costs down
for transmission,” he said.
The study aims to answer a series of questions. Who should
own transmission? A public entity? One or more private entities? Or a
consortium of entities? Who should finance transmission?
And how should projects be connected to mainland grids?
Should planners opt for radial interconnections (a single cable connecting an
individual project to the onshore grid), or a networked solution in which a few
major connections act as hubs to connect distant offshore projects to online
transmission?
Advice from Europe
Soon after New York announced the launch of its transmission
models study, Wilfried Breuer published an op-ed at NJ Spotlight, a New Jersey
politics and policy website, advising policymakers to follow Europe’s example
and keep offshore wind project generation and transmission separate. Governor
Phil Murphy signed an executive order in January directing New
Jersey regulators to put the state on a path to deploy 3,500 megawatts of
offshore wind by 2030.
Breuer is managing director of TenneT Offshore and a member
of the executive board of its parent company TenneT Holding B.V. TenneT is a
transmission system operator (TSO) that has connected 5,300 megawatts of
offshore wind in Germany and the Netherlands to mainland grids.
“Building an offshore grid separately from the wind farms
and offering access to the power grid on a nondiscriminatory basis is the key
to creating a level playing field for competition between offshore generators,”
he wrote.
He went on, “As can be seen in the declining prices offered
by those generators in Germany and the Netherlands, providing access to an
offshore grid stimulates innovation and cost reductions in the offshore wind
industry.”
State support for transmission connections have enabled
winning bids, both this year and last, for offshore wind projects in Germany
and the Netherlands with
no direct government incentives. The projects, with delivery dates in the
mid-2020s, will sell their electricity on the wholesale power market.
Breuer said it was “shortsighted” for developers to seek to
build and own the transmission to shore. “Bundling transmission with wind
generation is ultimately more costly because it limits competition. It reserves
large amounts of the grid to first movers that can develop a wind farm and
provide the connection to shore.”
The result? According to Breuer, an “accidental, unregulated
monopoly” that “doesn’t provide a level playing field for those developers that
aren’t in the transmission business.”
In an email to GTM, Stephanie Bätjer, communications manager
for the Renewables Grid Initiative (RGI), explained that in Germany “the
general rule is that the project developer pays for anything connecting to and
including the at-sea substation. The connection from the substation to the
mainland and any mainland converter stations are the grid operators’
(financial) responsibility.” RGI is a collaboration of European environmental NGOs
and TSOs based in Berlin.
New York’s transmission model study due soon
NYPA’s Lurie said the New York transmission study partners
will solicit feedback from all the major European players — project
developers, TSOs and regulators — in the coming weeks. The group met
for the first time on August 23 to narrow the scope of the study.
The goal is to support the ongoing process by the New York
Public Service Commission to evaluate technical options for offshore wind.
NYSERDA is conducting a technical conference on the topic this fall.
“We want to finish this study quickly, so it can be
presented into that conference and inform those discussions,” said Lurie.
Future research, he said, will determine if there are
economies of scale to be gained by coordinating with neighboring states on
transmission connections.
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