4. Who will manage the design, construction and interconnection process?

Arranging the multistate solicitations and determining cost allocation for constructing these assets would present major challenges, given that the U.S. does not have a national energy policy. It will be necessary for states — each with its own state energy policy — to work together and coordinate with FERC, the Department of Energy (DOE), independent system operators (ISOs), regional transmission organizations (RTOs) and other stakeholders to develop common goals and strategies.

Given the varying interests of these parties, an agreed-upon framework is needed to guide the decision-making process. This framework will need to define and memorialize roles and responsibilities. It will also need to address issues that may arise when transmission is split from generation. If, for example, either the connection is not available or generation does not come online per agreement, rules need to be in place to define the financial consequences.

In other words, it may be in the best interest of consumers to split transmission from generation. But it will take significant policy and regulatory development to document how that will happen.

5. How will states and regional organizations coordinate together?

The New England states, along with New York, New Jersey and other states along the Atlantic Coast, have struggled with mutual projects in the past, including interstate electric transmission. To date, these states have taken few steps to address interstate coordination of offshore wind transmission.

ISOs and RTOs also have a significant stake in these projects — especially offshore grid projects that cross multiple states. ISO New England, New York ISO and PJM, a Mid-Atlantic region power pool, all share interests in wholesale energy markets and grid stability but have struggled to work together on onshore transmission. To date, little inter-ISO/RTO coordination related to offshore wind transmission has taken place.

That will need to change. Interstate and ISO/RTO coordination is without question challenging, given the variation in individual state energy policies and stakeholder priorities. But it is essential. A plan is needed to make it happen.

6. How will offshore transmission be regulated?

Currently, owners of wind power generation have the requirement to develop transmission along with their generation projects. But what will happen if and when generation and transmission are separated? Any master plan for offshore transmission must include rules of engagement.

First, a framework is needed to define and clarify roles for all stakeholders, including the DOE, FERC, NERC, ISO/RTOs, state commissions, state executive and legislative branches, and the U.S. Congress and president. The Bureau of Ocean Energy Management (BOEM), which is responsible for leasing underwater lands for energy production, is also involved. The role of nongovernmental organizations (NGOs) must also be defined. Assurances are also needed that policies governing the transmission system will be unaffected by changes in elected and appointed governmental officials.

These stakeholders will face the challenge of creating national and/or regional plans for offshore wind transmission without also creating a national/regional energy policy — a tall order indeed. They will also need to consider difficult questions related to cost allocation, including the ramifications of FERC 1000, which requires a regional planning process for allocating transmission construction costs to regional entities roughly proportional to the benefit received.

A framework is also needed to determine the routing, siting and permitting process for these projects. Who is in charge? Is there a “lead agency”? How will transmission developers get permission to develop projects if transmission is separated from generation? These are difficult questions to answer for busy stakeholders.

7. How will transmission projects be financed?

Because offshore projects will all likely require financing, a master plan should also address the role that the financial sector will play in defining parameters and making go/no-go decisions on these projects.

To obtain private financing, developers must be able to demonstrate that these are good, bankable projects that will deliver an acceptable return on investment. If underwriters are skeptical, transmission construction could potentially be constrained. If the development costs for transmission infrastructure are either unknown or deemed to be prohibitively expensive, it could lead banks to deny financing for generation projects as well.

A master plan will need to address how such issues will be handled, should they arise.

More to Come

These, of course, are not the only questions the burgeoning U.S. offshore wind industry faces. Issues like supply chain, ports, workforce development and Jones Act compliance also demand significant attention. There are also questions about how offshore wind and energy storage can work together.

There is recent indication that the industry may be paying closer attention to offshore wind transmission issues. In his annual State of the State address in 2019, New York Gov. Andrew Cuomo announced plans to significantly upgrade the state’s renewable energy targets, including quadrupling its offshore wind target to 9 gigawatts (GW) by 2035. To reach that goal, the plan says offshore wind transmission would need to initiate “a first of its kind effort to evaluate and facilitate the development of an offshore transmission grid that can benefit New York ratepayers by driving down offshore wind generation and integration costs.” This seems like a great first step in the right direction.

In other places, the industry is analyzing the grid’s ability to host distributed energy resources, such as solar, without adversely impacting power quality or reliability. The market then shares with developers where capacity is available and connections can be made. Does the principle of hosting capacity also make sense for offshore wind?

Only time — and much work on this and many offshore wind topics — will tell.