The addition of Belgian transmission company Elia to investors in the proposed Atlantic Wind Connection undersea grid is a significant endorsement for the project, the project’s principal Bob Mitchell said.
Atlantic Wind Connection, which wants to build a 350-mile submarine cable between Virginia and New Jersey to transmit power from offshore wind farms to the onshore grid, said on Friday that Elia would take a 10 percent equity stake in the venture. The announcement was official confirmation of involvement by the Belgian company, which has extensive experience in the European offshore wind industry.
For more on the Atlantic Wind Connection, read: Just The Beginning For Atlantic Wind Connection.
“This is tremendous confirmation that we are on the right track,” Mitchell told Breaking Energy in an interview after a public meeting on the AWC project in Point Pleasant Beach, a New Jersey shore community.
And Then There Were Four
In addition to its financial backing, Elia will offer transmission expertise from its direct experience with offshore transmission development in Europe.
The Elia Group built the first offshore HVDC project in Europe, and is now helping to construct the European Super Grid, a transmission network that will interconnect Europe and regions around its borders with a high-voltage direct current power grid that is designed to incorporate renewable energy, particularly wind, and reinforce security of supply.
Elia, which first approached AWC about participation and joins Google, Swiss renewable-energy investor Good Energies, and Japanese manufacturer Marubeni as AWC equity partners The four entities together have invested “tens of millions of dollars” in the project, AWC’s Mitchell said.
AWC plans to raise more equity at the time of the financial close, estimated for early 2014, and will finance the rest of the project through debt, Mitchell said. He estimated engineering, construction and procurement will cost $5.5 billion.
The partners may choose to provide additional equity or can bring in other partners as the project progresses, Mitchell said.
Savings Through Eased Congestion
The undersea grid would transmit power to the onshore grid at a limited number of points in New Jersey, Delaware, Maryland and Virginia, removing the need for individual wind farms to construct their own transmission lines.
Offshore wind generation interconnected through the project would reduce system-wide production costs from fossil-fuel fired generation by $1.1 billion per year, according to a recent study by the Brattle Group.
Power generated by proposed mid-Atlantic offshore wind farms – an estimated 7,000 MW — would also help ease grid congestion in the U.S. northeast, Mitchell said.
“All of us who live here are paying several dollars a month extra because of congestion on the lines,” Mitchell told and audience that included local officials, trade unionists, and environmentalists.
Lower congestion costs of some $17 billion would help offset the estimated $30-$35 billion price tag for the AWC and the wind farms connected to it, Mitchell said. Including other benefits such as reliability improvements and lower fossil-fuel production costs, benefits would total $43 billion, according to AWC calculations.
The project recently received FERC approval for rate incentives. The project has already filed to acquire offshore rights-of-way with the Interior Department’s BOEMRE, which has told Congress the project is on the fast-track.