Atlantic Cable Project Delays

OFFSHORE WIND STILL PROMISING

Published In: EnergyBiz Magazine November/December 2012

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THE NORTHEAST CORRIDOR has a high density of power demand, a congested electric transmission grid and a deep resistance to construction of obtrusive industrial infrastructure. Robert L. Mitchell sees opportunity in the situation. As CEO of Atlantic Wind Connection, he is developing an undersea transmission cable to run offshore from northern New Jersey to southern Virginia, with five or more links to the onshore grid. It will serve as a backbone for a chain of wind farms to be developed independently but tied into his line.

The Atlantic Wind Connection will be a 320-kilovolt direct-current cable integrating up to 7,000 megawatts of offshore wind generation into the Mid-Atlantic power market. Trans-Elect Development, the pioneering independent transmission company founded in 1999 by Mitchell, is leading the project, with investment from Google, Bregal Energy, Marubeni and Belgian transmission company Elia Group. It will run about 350 miles when completed in 2021 or 2022 at a total cost of $5 billion. Construction of 170-mile-long, $1.7-billion Phase 1 will begin in 2015, with the rest of the project built out in phases.

The project reached what Mitchell called "a major milestone" in May when the Department of the Interior issued a declaration of no competitive interest for the use of certain areas of the Outer Continental Shelf. The action meant that AWC would avoid the delays associated with an auction for the leases to the cable's proposed route. It "opens a door for us to get started with the environmental impact statement," Mitchell said. Engineering work will proceed concurrently, capped by financial close. The construction start has slipped two years since AWC announced the project in October 2010.

That slippage occurred largely because the Federal Energy Regulatory Commission took longer to issue Order 1000 and gave the regional transmission organizations more time than anticipated to make their compliance filing to Order 1000, Mitchell said. FERC's Order 1000 requires regional transmission organizations to provide a methodology for admitting transmission proposals to link renewable energy into their grid. Being admitted into PJM's regional transmission expansion plan is AWC's top priority, Mitchell said. AWC will be one of the first tests for PJM's process once it is established and approved by FERC.

The AWC cable is being developed independently of any specific offshore wind projects, although in full consideration of the potential wind farms since it will be much less profitable if they choose not to tie into it. "When we first announced, a number of the wind developers thought that they were going to be able to get their projects in service prior to the time that we would be able to get into service," he said. But "the regulatory process for the wind farms has moved slowly. Now, most wind farm developers see that we are essentially on the same time line, so many of the wind farm developers have come over to understand the benefits of the backbone to them." AWC and the developers - "fewer than 10," Mitchell said - are discussing interconnection issues in spite of the uncertainty about congressional approval for extending the investment tax credit. A Senate committee has reported out a one-year extension, but the House has not acted on the issue.

Still, Mitchell is confident offshore wind will be accepted. Opinion polls commissioned by AWC in New Jersey, Delaware and Maryland found the range of support for offshore wind was 77 to 80 percent. "That is a phenomenally high percentage of the public expressing support for anything," he said. After poll subjects were told that the higher cost of the offshore wind could increase a ratepayer's monthly bill $3 to $5 per month, "even at $5 a month, the support for offshore wind was 63 percent," Mitchell said.

Substantial benefits will accrue from the cable, according to AWC's marketing materials. Wind farms tying in will avoid between $1.2 billion and $3 billion in costs by using AWC's high-capacity cable instead of each running its own lower-capacity line to the onshore grid. The backbone will allow the operator to direct power to congested areas, lowering power costs there while increasing revenue for the generating entity. It will also act as a bypass to onshore grids during emergencies such as major storms, heat waves and blackouts. David Lindsay, the Electric Power Research Institute's program manager for underground transmission, while specifically remaining neutral about the project, agreed that, from a technical perspective, these are reasonable expectations for the cable.

The characteristics of the Mid-Atlantic coast are especially favorable to offshore wind development, said Mitchell. "The continental shelf off the New Jersey-Delaware-Maryland-Virginia coast slopes very gently many miles out before it sharply drops off. It goes out 30, 40, 50 miles in some areas before you get beyond 90 to 100 feet in depth. There really isn't any other place like that on the East or West Coast." The water depth increases much faster in the Northeast and on the West Coast, he said, so wind farms could not be far offshore. But floating platforms for wind turbines are being developed, so they also could use a backbone. "I don't think floating turbines are all that far off," Mitchell said. "I think it could be 2020 or shortly thereafter."

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