US green-light's New Jersey offshore wind transmission plan as 'reliable and affordable'
Federal Energy Regulatory Commission's approval clears way for state ambition to have 7.5GW of sea-based wind flowing into grid by 2035
The SAA process allows states to incorporate policy goals as an equal factor to market efficiency or reliability, as is typical, when proposing grid upgrades.
“We find that the proposed SAA agreement is just and reasonable and not unduly discriminatory or preferential,” the FERC commissioners wrote in their ruling.
The New Jersey tender targeted four objectives, including the upgrade of existing onshore transmission facilities, construction of new land- and sea-based power infrastructure, and the creation of an offshore grid.
“This first-of-its-kind agreement... provides a unique pathway to help states reach their energy policy goals while maintaining the focus on reliability and affordability,” said Suzanne Glatz, director of strategic initiatives and interregional planning at PJM. “FERC’s order establishes a template for all states in the PJM region to implement their specific public policies.”
“It’s a greater use of scarce resources, and results in fewer cables and fewer costs to the environment,” he said.
New Jersey BPU said in a statement: “FERC’s decision recognizes the importance of clean energy to our economy and environment, and specifically the central role that offshore wind will play in our future energy policies.”
The BPU said it is now in the process of reviewing the 80 bids, and anticipates making a final determination later this year “on which, if any, applications result in the most efficient and cost-effective outcome for New Jersey ratepayers”.
Despite growing enthusiasm for the offshore wind industry, New Jersey faced opposition from the Ohio Federal Energy Advocate (FEA), a public ratepayer activist group, as well as a group of transmission operators working within PJM’s region of service.
At issue was who pays for grid upgrades under the SAA transmission process. As noted in FERC’s ruling, the SAA explicitly states “the costs of transmission facilities that a state voluntarily sponsors are recovered only from the customers in the sponsoring state”, i.e. New Jersey.
PJM’s SAA process does, however, provide cost-sharing mechanisms for future users of grid assets built under the SAA process who are not New Jersey BPU-designated power generators.
New Jersey BPU stated that this cost-sharing mechanism is essential to protect New Jersey ratepayers from future “free riders” of its offshore wind grid.
James Danly, one of two Republicans on FERC’s board and the lone dissenting voice, expressed concern that the cost-sharing mechanism would enable New Jersey to “seek to shift or socialize the costs of the transmission projects... to the ratepayers in other states”.
The other four FERC commissioners disagreed with Danly’s assessment by noting that the SAA provides sufficient guarantees that only ratepayers in New Jersey would be liable for the costs of the state’s offshore wind grid.