PJM States See Big Possibilities in Wind


With the likelihood of large-scale off-shore wind generation taking hold in the U.S., coastal states and developers alike are envisioning and planning for a future ocean grid capable of interconnecting large quantities of power into the PJM resource pool, and PJM planners are working to adapt interconnection rules to facilitate the process. 

The momentum for an East Coast offshore wind market has been building for several years. Several states have raised the possibility of developing partnerships to maximize the opportunities that future offshore wind projects might present.

Those partnerships could include a multistate offshore wind collaborative. The states envision that this effort would both create opportunities to combat climate change and also establish an industrial center where components for the various Atlantic coast projects could be fabricated or assembled.

The coastal states in the PJM footprint are at various stages of developing offshore wind power projects.

  • New Jersey’s renewable energy credits program has been on the books for 10 years. Soon after he took office in January 2018, Governor Phil Murphy signed an executive order on offshore wind development. Murphy’s order directs responsible state agencies to implement the Offshore Wind Economic Development Act fully to meet a goal of obtaining 3,500 megawatts (MW) from offshore wind by the year 2030.  Procurement of 1,100 MW of offshore wind is currently pending before the New Jersey Board of Public Utilities.
  • Maryland amended the state’s renewable portfolio standard (RPS) several years ago to include offshore wind projects located between 10 and 30 miles off its coast. Governor Larry Hogan’s RPS goal is to generate 25 percent of the state’s electricity from renewable energy resources by 2020.  In 2017, the state’s Public Service Commission approved two proposed offshore wind projects for 368 MW of total capacity.
  • At the end of 2018, Virginia released a report that served as roadmap for future development, including creation of the state’s Offshore Wind Development Authority. The state approved an offshore wind project in November 2018 that includes two 6 MW turbines, located 27 miles off the coast of Virginia Beach. Dominion Energy has said it is committed to having 3,000 MW of solar and wind energy under development or in operation by the beginning of 2022.
  • North Carolina’s 18-month moratorium on land-based wind development ended in January. Although it did not specifically address offshore wind, advocates expressed concerns that it would curtail offshore development. According to the Bureau of Ocean Energy Management, there is currently one active North Carolina project. The federal government has leased an area off the Outer Banks for a wind farm of up to 2.5 gigawatts. Avangrid, the developer, is still in the initial phase of evaluating the 191-square-mile patch of ocean, carefully situated past the Kitty Hawk horizon. Like other states, North Carolina is looking into bringing business to the state to manufacture the components, which are now largely made in Europe.
  • Delaware Governor John Carney is supportive of renewable energy and commissioned an offshore wind energy working group in 2017. After gathering information through meetings and written comments, the group presented a report for the governor in June 2018. Citing declining costs to build offshore wind, the group recommended waiting to develop specific projects until costs drop further, as more offshore wind energy projects are planned along the East Coast in the coming years. The report also reflected on the collaborative nature of some other states’ suggestions, touching on what Delaware would need to do to position itself as part of the supply chain for offshore wind projects.

PJM’s Evolving Role

To allow for the development of these projects and their eventual interconnection to the grid, the PJM planning model and interconnection rules will have to adapt.

When PJM and stakeholders initially developed the rules for general merchant transmission and generation interconnection, wind power wasn’t a viable source of energy on a large scale. The offshore wind farm was an idea for some undefined future.

In a proposed merchant transmission arrangement, the transmission line is built first without having identified generation, but with a request for megawatt injection amount capability. Transmission developers want to be able to obtain capacity interconnection rights for the merchant transmission line, just as merchant generators do.

Merchant projects are any projects that come through PJM’s interconnection queue and earn their money through the interconnection rights, such as CIRS, to participate in the capacity market. There are no guarantees that the project will clear in an auction or that it will be dispatched in the energy market. 

Basically all generation in PJM is considered a merchant project (some states have other mechanisms where they can earn other revenue streams, such as zero emission credits, but that is outside PJM’s purview).  Most of the transmission development in PJM occurs within incumbent utilities that have a service territory defined under state jurisdiction.  Such development is under a cost of service construct, where transmission projects are planned to meet reliability (or economic) criteria. They earn revenue for such projects through a filed FERC rate that is for the most guaranteed recovery of the investment.

Capacity interconnection rights allow owners to input generation as a capacity resource into the transmission system at the point of interconnection (where the generating facilities connect to the transmission system).

Capacity interconnection rights (CIRs) provide developers access to future revenue, which is important to their economic viability, and ensures that PJM can identify any network upgrades necessary to support both this future generation and transmission.  CIRs are granted only to interconnection customers who connect generation, and are granted based on their single point of interconnection.

Suzanne Glatz, director – Infrastructure Planning, said that PJM’s rules are not currently set up for those transmission-only developers seeking CIRs, and cannot accommodate them. 

“We understand there is a growing interest in offshore generation development and potentially different business models for development,” said Glatz. “We want to work with states that are encouraging this kind of investment; we don’t want the process to be an impediment to new ideas.”

Following stakeholder passage of a problem statement and issue charge at the Feb. 8 Planning Committee meeting, PJM is developing education on the current process rules and will explore options for developers covering the unique and different aspects of developing transmission facilities for offshore generation.

Incorporating these requests into the process would enable PJM to study the impacts of anticipated injection on the transmission system as well as the scope and cost of required upgrades, Glatz said.

The issue charge calls for a two-phased approach. The first phase will cover a single line for connection of future generators; the second phase in 2020, an offshore grid. Stakeholders will look at developing options following the PJM consensus-based interest resolution process.

Glatz added that whatever the outcome, going through the process will be valuable to asset generators and transmission developers in the future. 

Not the First Attempt

In 2011, PJM performed an analysis of different scenarios related to offshore wind development, ranging from 400 MW to 20,000 MW.  The analysis was done in response to industry interest at the time.  There has been little progress on offshore development since that time. 

Recently, in December 2018, the New Jersey Board of Public Utilities rejected for the third time the Nautilus Offshore Wind/Atlantic Fisherman project, 10 years after it was initially conceived.  The developers envisioned it as a small project on which the state could build, similar to Rhode Island’s Block Island Wind Farm.

The Atlantic Fishermen project is yet to start physical construction, Glatz said, which highlights the challenges of developing offshore wind generation projects. In addition, the project was proposed for state waters, within three miles of the shore. There were concerns about migratory bird paths, as well as concerns that the project might have become obsolete quickly as larger projects farther out on the ocean shelf were built.

According to the Bureau of Ocean Energy Management, roughly 50 percent of the United States total population lives in coastal areas, which includes counties directly on the shoreline or counties that drain to coastal watersheds.

In a white paper and subsequent technical reports, the Department of Energy Efficiency and Renewable Energy said that offshore wind in the U.S. has a gross resource potential of 10,800 gigawatts (GW) of capacity, or more than 44,000 terawatt-hours (TWh) of electricity generation per year.

To calculate the gross resource potential, analysts looked only at areas where wind farms are feasible. For example, they omitted all regions where the ocean is deeper than 1,000 meters because the systems for attaching floating offshore wind turbines to the sea floor are prohibitively expensive at those extreme depths.

U.S. offshore wind has a technical resource potential of more than 2,000 GW of capacity, or 7,200 TWh of generation per year. For context, this is nearly double the nation’s current electricity use.  In Computing America’s Offshore Wind Energy Potential, analysts describe how they track technical resource potential by calculating how much kinetic energy the wind turbines produce, followed by how much power an individual turbine can produce.