New Jersey took steps last week to initiate a second competitive solicitation for new transmission to facilitate delivery of the state’s offshore wind policy goal, which was recently increased to a target of 11 GW. Similar to the state’s first such solicitation, this competitive solicitation would be administered by PJM Interconnection, L.L.C. (PJM) in coordination with the New Jersey Board of Public Utilities (Board) under PJM’s State Agreement Approach (SAA).
State Agreement Approach
The SAA is a mechanism in the PJM rules under which one or more states within the PJM region can request to include state public policy objectives within the regional transmission planning process and voluntarily agree to assume the associated costs.
New Jersey was the first state to utilize this process, finding, among other things, that this approach undertaken in partnership with PJM would reduce the likelihood of offshore wind project delays. In 2020, the Board requested PJM’s assistance under the SAA in soliciting transmission project proposals to facilitate interconnection and delivery of the state’s then-current public policy goal of 7.5 GW of offshore wind generation by 2035.
Following the competitive solicitation administered by PJM, the Board selected a series of onshore transmission projects that it found would best accommodate its offshore wind public policy goals while reducing environmental and other impacts, including Mid-Atlantic Offshore Development, LLC’s (MAOD) and Jersey Central Power & Light Company’s jointly submitted Larrabee Tri-Collector Solution.
Under a SAA Agreement with PJM, New Jersey has agreed to relevant cost-assignment terms and the manner in which the new transmission capability could be assigned to generators selected by the state through its offshore wind generation solicitations.
Meanwhile, the state further expanded its public policy goals last year by over 3 GW to a total of 11 GW of offshore wind generation by 2040. Accordingly, last week the Board made a second formal request to PJM under the SAA to initiate a competitive solicitation to accommodate the additional expected offshore wind capacity and to explore whether a more integrated package of onshore and potentially offshore transmission projects — including a potential offshore transmission backbone option to connect different offshore wind lease areas — could best meet this objective. The state is expected to prepare a guidance document with additional solicitation and proposed evaluation criteria details and to explore with other states the viability of a potential regional SAA approach.
Offshore Wind Generation Solicitations
New Jersey has already completed two offshore wind solicitations, under which it has awarded three projects totaling 3.75 GW of capacity, and the third solicitation, which opened in March 2023, is expected to close on June 23, 2023, with awards expected by the end of this year. The state further intends to hold offshore wind solicitations every 18 to 24 months through 2026 to meet its stated policy goals.
While the three projects already awarded through the state’s first two solicitations were contemplated to each separately interconnect to the PJM transmission system and to individually bear the associated costs and risks, bidders into the currently pending third solicitation are required to submit applications that accommodate the integration of the SAA coordinated transmission solution, i.e., the Larrabee Tri-Collector Solution. To help bidders with this novel approach, the Board and MAOD held a technical conference on March 24, 2023.
Moreover, if a second SAA solicitation results in New Jersey sponsoring additional facilities or a more integrated package of transmission projects, bidders into future offshore wind generation solicitations may have a greater number of interconnection options. And, while developing the transmission and offshore wind generation components separately could raise coordination and other risks, this approach could also better leverage the respective expertise of offshore wind generation developers and transmission developers and facilitate more efficient interconnection and transmission development as New Jersey pushes forward with its public policy goals.
For further information, please contact:
Diana Jeschke, Linklaters
diana.jeschke@linklaters.com
