June 1, 2018

Options for “Getting to Shore” Discussed at First U.S. Offshore Transmission Conference

By Val Stori

Offshore wind will be a major industry and economic opportunity for the U.S. Strong political leadership, pioneering state policies, and nearly 1500 MW of projects under development along the Atlantic coast are shaping the industry. Several states have made commitments to developing 8000 MW by 2030. One of the major challenges to realizing this industry is the development of offshore transmission and interconnection to onshore substations.

The opportunities and challenges of developing a cost effective, technically feasible, environmentally responsible offshore transmission network and interconnecting the offshore cables were the topics of the day at the first Offshore Wind Transmission, USA conference hosted by Global Transmission Report in New York last week. The availability and development of offshore wind’s associated transmission is a primary concern for investors and developers, and European experts and transmission operators were on hand to discuss their experience and its relevance to the U.S.

The conference sought to address three main questions: 1) what are the options for building the offshore transmission network; 2) what are the possible ownership models for the offshore transmission network; and 3) what technology solutions exist for the U.S.? Different sessions provided the state and federal policy context for offshore wind development in the U.S., explored the options for developing the transmission infrastructure, and discussed the technology and equipment needs in the state and federal regulatory context.

Two main schools of thought were presented at the conference—the “UK model” or the “generator lead line model” and the “German model” or “cooperative transmission model.” In the former, each project developer is responsible for building its own generator lead line to shore; before project operation, the transmission asset is sold to a transmission generator. By contrast, in the German model, the government mandated a physical extension of the grid into the North Sea to accommodate for future offshore wind development. The Transmission operator builds the grid and receives rate recovery. There are pros and cons to both in terms of cost effectiveness, environmental impacts, permitting timelines, shipping impacts, and construction lead times. The cooperative/shared transmission model likely has less environmental impact (limiting the number of cables to shore), can maximize value and reduce costs, and cooperatively approach the limited number of interconnection points. Conversely, shared infrastructure can strand built assets and lead to high costs. Such was Germany’s experience, where TenneT—the transmission service operator—had to indemnify several project developers for a delay in connecting completed offshore wind farms. Consequently, the shared infrastructure model poses greater risk.

In contrast to the German model, the UK offshore transmission ownership model allows a project developer to construct a direct radial/generator lead line to shore before selling the asset to an Offshore Transmission Owner (OFTO). This model may only be beneficial for the first tranche of projects, which can easily connect to the best available interconnection points. This approach also provides security of delivery, reduces risk, and provides a secure, strong revenue stream for the OFTO, which takes over the transmission line after construction. This approach, however, likely has greater environmental impact, can quickly block access to interconnection points, and can cause navigation/anchoring problems.

Developers at the conference voiced their preference for the direct radial approach versus the shared infrastructure approach so that they can have direct control over how and when the offshore transmission line gets built. One way to assuage developer’s apprehension of delayed transmission cabling is to cooperate on timing of a shared offshore infrastructure. Because the permitting and construction timing of an offshore project and a transmission network vary significantly, planning and permitting transmission routes needs to happen alongside—or in advance of—energy procurements.

In addition to hearing about the different models for getting offshore wind energy back to shore, conference participants learned about the different technology options for exporting the current to shore. Panelists discussed the applications for each technology and provided their perspectives on site-specific solutions to reduce capital costs and reduce line losses. High-voltage direct current (HVDC) is the current preferred method for exporting current to shore in Europe, as well as the common technology for shared infrastructure. However, in Europe the offshore wind farms are much more distant from shore and have greater installed capacity than the US will have from its first tranche of projects, and HVDC is better suited for long distances. HVDC is more expensive, but does result in fewer transmission losses. In contrast, alternating current (AC) has a shorter delivery time and can be a cheaper solution for exporting power. Its limitations include cable length and current and line losses.

Choosing the right grid solution and its accompanying technology can make a big difference to offshore wind costs. This conference was the start to a timely conversation on the heels of last week’s procurement announcements from Massachusetts and Rhode Island.

This blog was also published in Renewable Energy World.

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