Infrastructure Upgrades: Logistical hurdles remain as hopes for offshore wind power become a reality

President Joe Biden’s administration laid out ambitious additional goals in September to boost offshore wind power generation, one of the American renewable energy industry’s emerging wide open frontiers.

The federal announcements come as coastal states across the country are increasingly setting offshore wind energy targets, seeking to capture not just clean energy but the potentially big economic benefits of their ports serving as hubs for the vessels, blade manufacturing, cables and other infrastructure needed to get turbines more than 850 feet tall installed miles out at sea.

But amid news releases touting megawatt targets and jobs, there’s been less attention on the challenge of bringing all that electricity ashore and connecting it to a grid that was designed to bring power to the coast, not the other way around.

“It is so exciting to see the goals put forward and it’s a great signal and clear signal to the industry,” said Maddy Urbish, head of government affairs and market strategy for New Jersey at Ørsted North America. The Danish company, a world leader in offshore wind, currently has 5,000 megawatts of projects under development or under construction in U.S. waters.

“So that’s incredibly encouraging and exciting for the industry. When we get down to the challenges we see from the grid it becomes immediately less sexy,” Urbish said.

A sea change

With nearly 95,500 miles of coastline and steady wind resources offshore, developers like Ørsted see vast potential in the U.S. market. The U.S. Department of Energy has estimated that domestic offshore wind generation potential is roughly equal to double the nation’s total electric demand. What’s more, about 80% of U.S. electric load is in coastal or Great Lakes states near offshore wind resources.

“We’ve significantly increased our workforce here in the U.S. and that’s in direct response to the potential here,” Urbish said. “The U.S. is a key market for Ørsted at this point.”

New Jersey just announced a new 11,000 megawatt offshore wind target, the largest in the country. Virginia’s Dominion Energy is pushing to get its 2,600 megawatt commercial project finished by 2026 and the state wants a total of 5,200 megawatts by 2034. Maryland has approved more than 2,000 megawatts of offshore wind capacity. North Carolina has a goal of 8,000 megawatts by 2040.

Massachusetts is contracting for 5,600 megawatts of offshore wind by 2027. Maine says its initial goal of 5,000 megawatts by 2030 is “not realistic at this point” but still considers offshore wind “one of our state’s largest untapped clean energy resources.” Louisiana, with a large, skilled offshore oil and gas workforce that is partially repositioning for offshore wind, aims for 5,000 megawatts of offshore wind by 2035 in its most recent climate plan.

And the new Inflation Reduction Act undoes a Trump administration moratorium on federal offshore wind leases in the Southeast, potentially opening up new opportunities for Georgia, the Carolinas and Florida, though the Sunshine State’s potential is seen as limited because of a lack of strong, sustained winds near the coast.

However, getting all that power to electric consumers will require billions in upgrades to the electric grid and a whole lot better regional planning by states and grid operators, experts say.

“Offshore wind is big,” said Simon Mahan, executive director of the Southern Renewable Energy Association, a trade group for large renewable energy and energy storage companies. “When you bring it ashore it’s gonna have an effect on nearby generation regardless of market structure. They’re the size of nuclear reactors. … So it’s really important to do good studies.”

‘A big job’

Until fairly recently, renewable energy advocates say there’s been less emphasis by policymakers and grid managers on transmission infrastructure upgrades and the comprehensive regional planning needed to make mass offshore wind a reality, though the federal government and states are starting to come to grips with the scope of the problem.

“There needs to be a lot more done than what’s being done right now and people are starting to realize that,” said Walt Musial, principal engineer and offshore wind platform lead at the National Renewable Energy Laboratory. “The integration of this is going to be a big job and something we have to start working on soon. These transmission projects can take longer to build than the plants themselves.”

With relatively small, stand-alone wind projects, it is often feasible for developers to find their own solutions to interconnection, said Mike Jacobs, a senior analyst with the Union of Concerned Scientists who focuses on renewable energy and the electric grid. Indeed, wind developers with projects farther along in the pipeline can take advantage of old thermal generation sites — like Ørsted plans to do with the former B.L. England coal-fired power plant in Upper Township, New Jersey, south of Atlantic City — as points of interconnection because of the existing grid infrastructure there.

But with the potential scale of American offshore wind energy and the huge targets proposed by states like New Jersey, project-by-project transmission solutions won’t work, Jacobs said.

“Now you talk about 1,000 megawatts at a time. And New Jersey wants 10 of those. The transmission needed to be upscaled on shore is significant and needs to reach further inland,” he said. “The cable you brought to the nearest connection point from water to land is going to run into something that’s going to be inadequate and needs to be upscaled.”

‘Better than nothing’

That means billions of dollars in upgrades that will be necessary to accommodate the offshore wind buildout contemplated by state and federal leaders and debates about planning and cost allocation involving regional transmission operators, which run much of the U.S. electric grid. In Virginia, Dominion Energy, the state’s largest utility, estimates the transmission upgrades required as part of its $10 billion, 2,640 megawatt wind installation will be about 16 to 17% of the total project cost, a company spokesman said.

PJM Interconnection, which runs the electric grid in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia, estimated that injecting offshore wind generation (it studied scenarios ranging from 6,416 megawatts up to 17,016 megawatts) into the existing onshore transmission system would require anywhere from $627 million in a short-term scenario to as much as $3.2 billion in long-term scenarios, per a study released last year. That study only examined upgrades that would be necessary to existing infrastructure, not any “sea-to-shore or any offshore transmission networks.”

“They do require a fair amount of upgrades to the traditional land based transmission system,” said Ray DePillo, director of development for offshore wind for PSE&G, New Jersey’s largest utility. “That’s a lot of megawatts to put into a single point or multiple points into the transmission system.”

PSE&G has partnered with Ørsted on Coastal Wind Link, a series of offshore stations that will connect multiple wind farms to the grid at a single onshore point rather than having every offshore wind farm connect using its own cable.

That proposal is among a series of transmission bids New Jersey’s Board of Public Utilities will consider under a deal it reached with PJM Interconnection. Generally, PJM would be responsible for planning transmission upgrades and allocating costs to accommodate individual offshore wind generation projects as part of the interconnection process.

But, with a giant backlog in PJM’s interconnection queue driven by a flood of new renewable projects and an interconnection review overhaul underway, New Jersey and PJM negotiated the State Agreement Approach, which “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 any state-selected build-out.” PJM, in turn, has run a solicitation for transmission bids on the state’s behalf in coordination with the N.J. Board of Public Utilities. It received more than 80 proposals ranging in cost from $1.2 billion to more than $7 billion, depending on various scenarios, PJM said, though those costs don’t necessarily include onshore upgrades. The board will ultimately decide what gets built.

“New Jersey came to realize that if they wanted to do this large and fast they had to take the matter into hand,” Jacobs said.

In short, New Jersey ratepayers will shoulder the cost of the transmission upgrades themselves, even though those grid improvements may have broader benefits for reliability beyond the state’s borders.

“This is a good news and bad news story,” Jacobs said. “The benefits from New Jersey doing this will flow beyond New Jersey. … What we’re doing is having the states fill a gap that was not expected and should not need to be done.”

Rob Gramlich, founder and president of Grid Strategies, a consulting firm, called the solution “highly suboptimal.”

“But I agree with New Jersey that although it’s suboptimal it’s better than nothing,” he said.

At the heart of the friction is the traditional guiding principle of interconnection, that new generators should pay for the transmission upgrades necessary to connect them to the grid because grid managers like PJM have not generally looked for broader benefits to the system, critics contend.

That model was tolerable when the new generators were large gas power plants that could be sited close to existing interconnection points and high voltage lines, but not so much now with hundreds of smaller, more diffuse solar and wind projects that are trying to connect to the grid, Gramlich added.

“The flaws of that system are now quite evident to everybody,” he said.

Tackling transmission

A new proposed rule by the Federal Energy Regulatory Commission aims to better quantify the broader benefits of transmission upgrades, which some renewable energy proponents say could grease the wheels for the buildout required to decarbonize the grid. And the recently passed Inflation Reduction Act includes $100 million specifically earmarked for offshore wind transmission planning, modeling and analysis.

“The fact of the matter is we need more studies, we don’t know what we don’t know,” said Mahan of the Southern Renewable Energy Association. “The IRA funding is there to help solve some of this problem.”

There are ongoing studies as well.

Melinda Marquis, offshore wind grid integration lead at the National Renewable Energy Laboratory, is leading a Department of Energy study expected to be finished next year that will identify the optimal interconnection points along the Atlantic coast. It is one of several seeking answers to how best to incorporate offshore wind into the grid, Marquis said, and states like New York, which is pushing for 9,000 megawatts of offshore wind by 2035, have done their own studies.

“The way offshore has been deployed in the North Sea, in England for instance, is the same way the very early offshore wind plants in the U.S. are developing. That is where each offshore wind plant builds one radial connection to shore. … So each developer is picking the cheapest, best place to inject the power,” Marquis said. “There’s a limited number of points of interconnection along the Atlantic.”

Right now, there are not many incentives for developers to share interconnection and transmission infrastructure, Marquis said. Her group’s study will quantify costs under various build-out scenarios, compare different transmission technologies, explore implications for grid reliability and examine effects on marine life and fisheries.

“The ocean is really a pretty crowded place,” she said, adding that the study is incorporating data on marine sanctuaries, national wildlife refuges, reefs, sea floor sediment, shipping lanes, fishing grounds and military areas, among others.

“We hope that the results of our study will be very helpful for the people who make decisions about the way transmission is expanded, how it is built, and we hope this will lead to a very resilient, reliable grid, with a very low cost to the ratepayer that minimizes impact on marine species and the marine environment,” Marquis said.

She noted that representatives from major U.S. utilities and grid operators are participating in the study.

“The Department of Energy really understands this and they’re funding us to tackle this,” she said.

‘All of the above’

Meanwhile, similar to New Jersey, other states are realizing the importance of taking the lead on transmission planning. New York wants offshore wind projects connecting to shore to be “meshed ready,” which means being able to share sea-to-shore connection infrastructure among different offshore wind plants rather than each one having a separate connection to shore. PJM said it was talking with other states about how to upgrade transmission to meet their energy goals.

“We have had exploratory discussions with our states to pursue similar goals like NJ but nothing formalized yet,” Ken Seiler, vice president of planning, said last month, adding that the grid operator is at work on the second phase of a regional wind study “meant to identify regional transmission solutions to offshore wind and all other renewable portfolio development planned for by the states.” PJM’s counterpart in the middle of the country, MISO, which covers an area stretching from Minnesota to Louisiana, says its transmission planning has been all land-based and there are no offshore wind projects in its interconnection queue.

“However MISO is equipped to study and evaluate any offshore projects that may be submitted in the future,” Brandon Morris, a spokesman for the organization, said.

And last month, five New England states, including Maine and New Hampshire, issued a joint “request for information” seeking comments from offshore wind developers, the electric transmission industry and others “regarding changes and upgrades to the regional electric transmission system needed to integrate renewable energy resources, including but not limited to offshore wind resources, as well as significant other new renewable resources” into the grid.

“I think this happens with all of the above, to use an energy cliche,” said Jacobs. “We will have some of the developers go ahead because they’re impatient and find the opportunities to build their own connections. We will have an institutional approach where we get the federal government and the regional operators to do what they are mandated already to do which is plan for a reliable, consumer friendly open access system. All this will happen because the states will present a credible threat to these institutions that are supposed to be doing it in the first place.”