PJM has marked a milestone in its regional transmission planning process that underscores our commitment to working with states to achieve their individual energy goals.
On Nov. 18, the New Jersey Board of Public Utilities unanimously voted to collaborate with PJM to advance that state’s ambitious offshore wind goals through a never-before-used provision of PJM’s Operating Agreement called the State Agreement Approach.
In doing so, New Jersey becomes the first state to integrate a public policy need into PJM’s Regional Transmission Expansion Plan (RTEP).
This is notable, because today our planning process is directed primarily by grid reliability criteria, market efficiency and transmission needs for new generation. Simply put, projects are planned based on a need to maintain the reliable flow of electricity or to relieve system bottlenecks (congestion) that cause higher electricity prices for some areas than for others.
This is the first time that a state public policy priority will be driving transmission planning projects included in the RTEP.
Part of Order 1000
The State Agreement Approach dates to 2013, when PJM implemented the Federal Energy Regulatory Commission’s Order 1000, which outlines FERC’s electric transmission planning and cost allocation requirements for public utility transmission providers such as PJM.
In that order, in addition to reliability and economic criteria, FERC required regional grid operators to “provide for the consideration of transmission needs driven by public policy requirements in the regional transmission planning processes.”
When the State Agreement Approach was crafted, PJM planners realized we were planning for something that did not yet exist, and we did not know exactly what shape it would take. With the surety in mind that the grid and technology would be changing, but not knowing what the landscape would actually look like, the provision was drafted broadly to accommodate the future.
Today, the State Agreement Approach enables a state or group of states to propose a project to assist in realizing state public policy requirements as long as the state (or states) agrees to pay all costs of the state-selected buildout included in the RTEP.
Planning for Future Transmission Needs
For New Jersey, it makes sense to initiate the provision now. The state’s goal of delivering 7,500 MW of offshore wind energy to consumers by 2035 necessitates an onshore system with the ability to accept increasingly large amounts of offshore generation. This is a change for the grid in this part of the country, where the PJM system will have a generation source to the east – closer to the major load centers.
PJM will include New Jersey’s needs for offshore wind-related transmission improvements in a competitive proposal window set to open in the first quarter of 2021. This will allow New Jersey to take advantage of PJM’s planning expertise, as well as the established competitive solicitation process.
Transmission component options include grid-to-onshore substations (fortifying the existing onshore infrastructure), onshore substations to offshore collector farms (establishing the connection from wind farms to shore), and an offshore transmission “backbone” that would link offshore wind farms to one another. Proposals would include line routes, substation locations, cost, construction schedules and other project design details.
PJM, in concert with New Jersey, will evaluate the proposals, and the state will have the final say whether to move forward with any project – or any combination of projects.
States in the Driver’s Seat
PJM recognizes that more and more, states are driving energy policy. And the states in our footprint are very different, each with their own goals. The State Agreement Approach provides one path for our states to contract for the transmission facilities required to advance their specific energy goals and objectives.
Some may wish to join New Jersey in a regional approach to creating an offshore wind hub off the Atlantic Coast.
We strongly believe that a regional solution and regional planning offer the most optimal solutions for a cost-effective grid and maximize value.
Having offshore wind generation to the east also will increase reliability and resilience for the PJM grid, complementing the generation to the west.
PJM is working not only with individual jurisdictions, but also collectively with coastal states to try to determine what the best options are, individually and collectively. That work and those discussions will continue.
These are exciting times, and the goals that states have established often require complex solutions involving many parties. PJM is committed to maintaining our role as a trusted, unbiased policy adviser and forum for those solutions, working with all of our states to help them realize their chosen energy future.