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Power & Pipes

FERC, CFTC, and State Energy Law Developments

In November 2019, New Jersey Governor Phil Murphy issued Executive Order 92 increasing the state’s offshore wind generation goal from 3,500 MW by 2030 to 7,500 MW by 2035. To date, the New Jersey Board of Public Utilities (BPU) has approved only one 1,100 MW offshore wind project, but is expected to conduct additional solicitations in 2020 and 2022 and approve approximately 2,400 MW of additional offshore wind generation.

In an effort to address continuing questions on how and where new offshore wind projects will interconnect to the transmission grid in New Jersey, the New Jersey legislature enacted S. 3985, which was signed into law by Governor Murphy on January 21. The new law authorizes the BPU to conduct one or more competitive solicitations for open access offshore wind transmission facilities. Such facilities must be used to facilitate the collection of offshore wind energy or its delivery to the New Jersey electric grid, and may be located either onshore or in the Atlantic Ocean. If constructed as outlined in the new law, these new transmission facilities will address one of the more pressing issues for offshore wind: the need for facilities to deliver what will be multiple gigawatts of offshore wind.

As “open access” transmission facilities, the facilities would be able to collect generation from several offshore wind projects and interconnect to the onshore grid rather than necessitating individual onshore points of interconnection for each offshore wind project. Open access offshore wind transmission is also under consideration in New York and New England, where several large-scale offshore wind projects have been approved and are under development.

The law presents several distinctive implementation issues. First, as transmission facilities, the rates for use of their capacity will be set by the Federal Energy Regulatory Commission, not by New Jersey, creating a disconnect between the agency that will identify the project and developer and the agency responsible for the rate. Second, any transmission facility built as a result of these solicitations will need to provide open access to any generation, regardless of whether that generation intends to sell to New Jersey utilities.