The East Coast offshore wind farm backbone that made headlines when Google announced it had become an investor, has now passed a key regulatory hurdle, though there are many more hurdles ahead. The Federal Energy Regulatory Commission (FERC) announced late Thursday that it has approved a return on investment rate for the project of 12.59 percent. Securing a generous return on investment for transmission is a key way some of these very expensive and timely transmission projects can be funded by investors.
As ClimateWire, which has a solid article on this via The New York Times , put it, the Atlantic Wind Connection group in charge of the project — and includes the Trans-Elect Development Corp., Atlantic Grid Development, and backers Good Energies, Google and Marubeni – got most of what it wanted, though it received a return rate just slightly under what it requested. But Robert Mitchell, Trans-Elect CEO told ClimateWire they can make those numbers work and go forward with the wind farm backbone.
Oh happy day. The transmission backbone is supposed to run at least 250 miles off the Mid-Atlantic coast, from New Jersey to Virginia, and will be able to connect six gigawatts of offshore wind farms. Six gigawatts of wind is about 60 percent of all of the wind capacity installed in the U.S. in 2009.
Estimated total costs of the project are between $5 billion and $6 billion, and Google only put up 37.5 percent of the initial funding for the transmission line, along with Marubeni’s and Good Energies’ initial investments. The massive costs to actually build the line will be paid for through separate financing planned for 2013. The first 150 miles will cost $1.8 billion and could start pumping clean power by early 2016, with the rest of the line getting completed by 2021.
Many more transmission lines will be needed to integrate clean power, from solar to wind, into the U.S. power grid. California alone will need seven new transmission lines if its investor-owned utilities are going to reach the state’s goal of getting 33 percent of its electricity from renewable sources by 2020, according to the California Public Utilities Commission (see Renewable Energy Charging up Transmission Tech, subscription required).
Google has been ramping up its support of clean power throughout 2010 and 2011, and has announced investments in various clean power projects, and has created an energy subsidiary called Google Energy that can buy and sell power on the wholesale market. Anything that can help Google control where and how it sources energy to power its data centers, is an economic interest for Google.
The AWS project is controversial and some utilities on the East Coast don’t support it. It has to gain favor with PJM, the group that helps manage the East Coast grid, and get into PJM’s project queue. In fact, FERC states in its ruling that the incentive rate is based on the project “being included in PJM Interconnection’s regional transmission expansion plan.” Beyond the wind backbone itself, the offshore wind projects will no doubt face the inevitable NIMBY problem.