Shoring up transmission: How an under-explored option could unlock the promise of offshore wind
Clean Air Task Force filed joint comments with the Natural Resources Defense Council, the National Wildlife Federation, Earthjustice, and other partners on the U.S. Department of Energy (DOE) Grid Deployment Office’s (GDO) recently published final guidance on National Interest Electric Transmission Corridor (NIETC) designation pursuant to section 216(a) of the Federal Power Act (FPA) as amended by the Infrastructure Investment and Jobs Act.
Offshore wind is a ready-to-deploy clean energy technology that can play a key role in decarbonizing electricity for the 40% of Americans living in coastal counties. This is particularly true in areas like New England, New York, and the Mid-Atlantic, where states have ambitious climate targets but little available land and limited alternative decarbonization options. National and state-level clean energy targets reflect the potential of offshore wind as part of the U.S. decarbonization portfolio – the Biden administration aims for 30 gigawatts (GW) deployed by 2030 on the path to at least 110 GW by 2050, and state-level targets collectively exceed the administration’s targets.
Despite this ambitious offshore wind vision, the planning and construction of its enabling infrastructure, such as the transmission lines needed to bring offshore-generated electricity to demand centers onshore, is riddled with complexity, coordination challenges, and leadership gaps. Existing regulatory structures designed for land-based transmission and generation facilities leave policymakers, developers, and other stakeholders in uncharted waters for offshore wind facilities. For the industry to succeed, innovative thinking, regulation, leadership, and policy design are needed in the transmission space.
Given the myriad opportunities and challenges offshore, Clean Air Task Force (CATF) and our partners asked DOE to designate Atlantic offshore transmission corridors the Department has already identified as essential for connecting ISO-NE, NYISO, PJM, and the non-RTO/ISO region of the Carolinas as National Interest Electricity Transmission Corridors (NIETC). A NIETC is a geographic area, based on the findings of the DOE National Transmission Needs Study, where consumers are harmed by transmission gaps and where new transmission would provide additional benefits like improved reliability and affordability. A NIETC designation unlocks key financing mechanisms available under the Transmission Facility Program (TFP) and the Transmission Facility Financing (TFF) loan program authorized by the Infrastructure Investment and Jobs Act and Inflation Reduction Act, respectively.
Offshore NIETC designation is a powerful and readily available tool to address coordination, leadership, financing, and logistical gaps in current offshore planning and development processes. Designating these Atlantic transmission corridors as NIETCs would not only alleviate transmission congestion and capacity issues hurting ratepayers but would also provide ancillary benefits that facilitate a well-planned and efficient start for the nascent U.S. offshore wind system.
State decarbonization policies and transmission congestion drive the need for offshore transmission
Off the Atlantic Coast, mid- and long-term offshore wind targets at the state level drive offshore transmission development. From Maine to South Carolina, Atlantic Coast states currently aim to develop 42 GW of offshore wind capacity by 2040 and nearly 80 GW by 2050. Offshore transmission is needed to connect wind turbines to points of interconnection (POI) with the onshore grid and deliver electricity to homes and businesses.
However, interconnecting offshore wind is not the only rationale for offshore transmission. A closer look at the existing onshore grid shows significant congestion and capacity constraints between Atlantic electricity markets. New England and New York could need more than eight times the current transfer capacity by 2035 to support projected load growth and clean energy uptake, and New York and the Mid-Atlantic could need more than four times today’s capacity. As severe weather events become more common due to climate change, connectivity is even more critical for consumer safety and affordability. For example, each GW of stronger transmission ties between New England, New York, and the Mid-Atlantic regions during the 2018 “bomb cyclone” event could have saved $30-40 million.
Improved transmission networks could also ease wholesale electricity price increases brought on by grid congestion. Some of the highest wholesale price differentials in the U.S. that could be alleviated by building more transmission exist between New York, a high congestion area, and New England, a relatively low congestion area.
Offshore transmission development would add transmission and renewable generation capacity while alleviating existing and projected grid congestion and providing electricity price relief. A robust offshore transmission system could also bring more flexibility to the system, allowing wind generated electricity to bypass transfers through the onshore grid, and instead transfer directly to other regions through the offshore network. As DOE stated in the Needs Study, an Atlantic offshore transmission system to support wind generation “may allow the New England and Mid-Atlantic regions to share direct transfers without needing to transfer through the terrestrial New York system,” which as noted is very constrained.
Why isn’t interregional offshore transmission booming?
If offshore interregional transmission can reduce congestion, promote grid resilience, open transmission capacity, and interconnect a promising new clean energy source, why is it so hard to plan and build? Developing an offshore transmission network faces challenges and hurdles across different jurisdictional levels. This added complexity injects layers of uncertainty into the transmission development process that preclude successful deployment under status quo conditions. Some of these challenges include:
- Transmission permitting processes and timelines vary across states. If working across states, developers must manage varied requirements and do their best to align those with materials orders, workforce hiring, and other logistics. Without coordination efforts across states, it is easier for a developer to manage simpler, more predictable projects, such as lines entering one POI or into POIs within one state.
- RTOs/ISOs have not historically planned for offshore wind. These planning organizations have not properly incorporated offshore generation or transmission into their transmission planning exercises. States without coastlines in RTOs/ISOs can also object to paying for transmission upgrades required to bring offshore energy to the onshore grid.
- Policies differ across neighboring RTOs/ISOs. Neighboring RTOs/ISOs have different interconnection processes and costs and incorporate public policy needs into transmission planning differently, making it difficult for states in different RTOs/ISOs, or the RTOs/ISOs themselves, to independently coordinate successfully.
- Sustained federal leadership is lacking. There is no sustained federal leadership on regional and interregional transmission planning, let alone on transmission planning offshore. The Federal Energy Regulatory Commission (FERC) has not yet issued orders on cost allocation and interregional planning that would imbue confidence in sub-national actors, and no single entity has emerged as an interregional transmission coordinator.
States and regions have banded together to try to address several of the challenges listed above, but these efforts have not yet been successful at addressing all of them. In New England, states founded a Joint State Innovation Partnership for Offshore Wind, a collaborative effort with transmission providers and wind developers aiming to proactively plan a regional transmission solution. And PJM, ISO-NE, and NYISO’s Interregional Stakeholder Advisory Committee provides a forum to coordinate on transmission planning across regions. However, these efforts are stymied by lack of authority to jointly plan transmission, streamline approval processes across regions, or resolve cost allocation disputes across states and regions. Federal action and leadership can overcome these challenges and enable successful interregional transmission deployment.
DOE’s NIETC designation for offshore corridors can unlock critical federal funding and support
As a federal entity, DOE can take an important step to address interregional coordination issues that states, developers, and RTOs/ISOs face today by designating corridors off the Atlantic Coast as NIETCs. Fortunately, DOE has already identified several promising multiterminal, high voltage interlinks connecting ISO-NE, NYISO, PJM, and the non-RTO/ISO region of the Carolinas in its Action Plan, underpinned by Atlantic Offshore Wind Transmission Study findings.
Though a NIETC designation would not solve all the coordination challenges listed above, the financial, logistical, and symbolic benefits of this designation off the Atlantic Coast are numerous:
- NIETC designation unlocks funding. The $2.5 billion under the TFP and $2 billion under the TFF loan program unlocked by NIETC designation would incentivize developers to build lines off the Atlantic Coast where DOE identifies the greatest need and will help address inflationary pressure that threatens timely construction of offshore wind and transmission projects.
- NIETC designation signals federal recognition of offshore transmission need. This designation would provide state policymakers, and the planning organizations supporting policymakers, with certainty of federal support for offshore transmission routes and offshore wind targets and can act as a catalyst for interregional planning.
- NIETC designation would address DOE-identified transmission capacity issues. Designations off the Atlantic Coast would incentivize projects that alleviate congestion and add transmission capacity where DOE itself has identified critical need. As DOE noted in the its final guidance on NIETC designation, “NIETC designation may be particularly valuable in geographic areas where the need for increased interregional transfer capacity has been identified.”
- NIETC designation would benefit densely populated areas with limited decarbonization options. Designation of NIETCs off the Atlantic coast would promote energy supply diversification, strengthen grid resilience and reliability, and reduce consumer costs by connecting clean energy generated offshore to heavily populated load centers where existing, onshore grids are constrained and largely fossil fuel dependent.
The federal government needs to take a stronger leading and coordinating role to unlock the promise of offshore wind energy and its necessary supporting infrastructure. Significant changes from the current transmission permitting paradigm will be critical to meet ambitious but necessary national and state offshore wind energy goals by 2030 and 2050. NIETC designation is one clear, near-term step DOE can take to direct developer and state attention to where transmission is most needed while enabling the connection of clean offshore wind-generated electricity.
