At least six major transmission lines with an aggregate price tag of nearly $9 billion are trying to get to the finish line in New England.
If any of them are successful, it would represent hundreds of millions of dollars worth of construction jobs in the region, but none of those lines are being built under a traditional utility model. They are being built on a merchant basis, meaning the developers take on the project’s risks, including the possibility that it might never see the light of day.
Two broad trends in the New England energy market are driving developers to take on those risks: a possible shortage of generating capacity and a need to bring more renewable resources into the region.
Prior to 2013, New England had a surplus of power generation, but, since then, power-plant operators have been shutting down older stations in response to economic and environmental pressures.
Just over 4,000 MW of generating capacity, about 12% of the region’s total, either has been shuttered or is scheduled to close in the next five years. The total includes the high-profile closure of two Entergy-owned nuclear plants, Vermont Yankee and Pilgrim, in Massachusetts. In a January briefing, ISO New England identified another 11 fossil-fuel plants that are at risk of closure.
While the closures have raised some alarms, several new plants have been proposed to fill the gap. ISO New England just concluded its annual forward capacity auction, the process it uses to ensure the region has sufficient capacity to meet expected demand. A total of 6,500 MW of proposed power projects bid into the auction, which covers the 2019-20 delivery year, and 1,459 MW of projects cleared the auction.
Those results calm some concerns but raise others. The proposed plants would all be fired mainly by natural gas, which could strain New England’s already limited gas-pipeline infrastructure and would further tilt the region’s resource mix toward dependence on a single fuel. In 2000, natural gas fueled 15% of New England’s generation fleet; in 2015, it fueled 49% of the fleet, according to an ISO report.
New England Clean Power Link has proposed a 150-mile transmission line to move Canadian hydropower under Lake Champlain and into Vermont. Donald Jessome—CEO of TDI New England, a portfolio company of private equity firm Blackstone Group—says this the link would address the need for fuel diversity identified by the ISO.
Jessome notes, “The turning point for us was the announcement that Vermont Yankee would close.”
Entergy made the announcement in August 2013 and closed the plant at the end of 2014, not only depriving Vermont and the region of 620 MW of capacity, but also changing the balance of clean energy in the region. Nuclear plants neither produce traditional pollutants (SO2, NOx or particulate matter) nor emit carbon dioxide.
The loss of that carbon-free generation could set Vermont and the region further back from goals set by the Obama administration’s Clean Power Plan, which aims to limit greenhouse-gas emissions from existing power plants.
The Clean Power Plan recently was stayed by the U.S. Supreme Court, but New England generators still have to comply with local laws.
Each of the six New England states has some form of renewable portfolio standard that sets a date by which a certain percentage of delivered electricity must be supplied from renewable resources. Connecticut’s target, for instance, is 27% by 2020.
The New England states are also members of the Regional Greenhouse Gas Initiative, a market-based regulatory program to reduce greenhouse-gas emissions.
The combination of retiring power plants, declining fuel diversity and a growing need for renewable resources has provided the conditions for a rush of power-line proposals to bring hydro and wind power into New England, especially into Boston and the more densely populated southern parts of region.
In addition to the New England Clean Power Link, the $1.2-billion project that would move 1,000 MW of Canadian hydropower, there is a competing proposal: the Vermont Green Line, a $600-million project being developed by a partnership of Anbaric Transmission and National Grid that would run 60 miles, from Plattsburgh, N.Y., under Lake Champlain and end in New Haven, Vt. It would be able to move 400 MW of Canadian hydropower and New York wind power into Vermont. Both lines have target service dates of 2019.
Another project—Northern Pass, being developed by Eversource Energy and Hydro-Quebec—would bring up to 1,000 MW of Canadian hydro 192 miles through New Hampshire to load centers in southern New England. The $1.4-billion project also aims to be on line in 2019.
Another three projects are designed to bring hydro or wind power from Canada and Maine down into the vicinity of Boston. The $2-billion, 1,100-MW Northeast Energy Link, proposed by Emera Maine and National Grid, would run 230 miles, from Orrington, Maine, to Tewksbury Mass. The Maine Green Line, a $1.5-billion project, proposed by Anbaric Transmission and National Grid, would run partly under the Atlantic Ocean and carry up to 2,000 MW. Finally, the Maine Power Express, a $2-billion project, would run 315 miles, from northern Maine to Boston Harbor.
The controversies those lines have generated go beyond siting and visual pollution. New England power generators do not want to see the market flooded with Canadian hydropower.
In a September 2015 letter to Massachusetts Gov. Charlie Baker (R), representatives from 21 power-generating facilities rallied against legislation under consideration in the state’s capital that would require the state’s utilities “to jointly, and competitively, solicit long-term contracts for clean energy generation resources and associated transmission.”
That legislation could result in Canadian hydro imports equal to “one-third of all the electric power consumed in Massachusetts and one-sixth of the power consumed in the ISO [region],” says Dan Dolan, president of the New England Power Generators Association.
The bill calls for contracts for up to 2,000 MW a year. It does not explicitly identify Canadian hydropower imports, but it does not exclude them. Most states in the region—except for Vermont and, in limited instances, Connecticut—also excluded Canadian hydro when they crafted their renewable portfolio standards.
The provision was intended to encourage the development of local resources, but now some states are more concerned about being able to meet their renewable goals.
Those concerns prompted another initiative that could benefit merchant transmission developers. In January, Connecticut, Massachusetts and Rhode Island closed bidding on a solicitation seeking 5,000 GWh of clean energy. Among the bidders were the Northern Pass and Vermont Green Line transmission projects.
Right now, policies seem to favor the merchant power lines, but transmission lines cross multiple constituencies and take years to develop. In August, backers of New Hampshire’s Northern Pass project altered plans and agreed to bury a portion of the line to win local approval. But earlier this month, 150 parties, many opposed to the project, filed petitions to intervene in the state siting process.
Some of the opponents point to TDI’s New England Clean Power Link, which has secured most of the major approvals it needs and is now waiting on a presidential permit. They contend that both lines are not needed.
While being at the front of the approval process is an advantage, there is also a question of overload. “It is not clear that there will be enough room for all of these projects,” says Jose Rotger, senior analyst and consultant at ESAI Power LLC.
But it is clear that there will be a lot of transmission projects in the years to come. “FERC Order 1000 was a game changer,” Jim Juras, regional general manager of power delivery for the New England and mid-Atlantic regions at Black & Veatch, says, referring to the Federal Energy Regulatory Commission’s 2011 order that brought competition to the transmission sector.