A completion target of fourth-quarter 2019 is set for a new underwater link between the electricity grids of Ontario, 13 Mid-Atlantic and Midwestern U.S. states and the District of Columbia by a construction application to Canada's National Energy Board (NEB).
A project description was filed earlier this year (see Daily GPI, Feb. 4).
Rising environmental standards enhance economic attractions of the US$1 billion (C$1.2 billion) proposal for the 1,000 MW Lake Erie Connector, said the sponsor of the 117-kilometer (72-mile) power transmission line, ITC Holdings Corp.
The new direct line between Ontario's Independent Electric System Operator (IESO) and PJM Interconnection in the United States would lop more than 50% off transaction costs of using current power trading paths, said a supporting study by The Brattle Group.
Expenses are forecast to be US$7.00 (C$8.40) per megawatt hour, as opposed to US$14.50-15.20 (C$17.40-18.25) for established routes around the lake and into the PJM market via the New York Independent System Operator and Midcontinent Independent System Operator.
Power prices in the PJM region -- which includes Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Washington, DC -- are already higher than in Ontario for 60-90% of all hours in the year, the study observes.
The PJM premiums are rated as liable to be increased by emerging policies of the states and the U.S. Environmental Protection Agency, which are evolving carbon emissions penalties and requirements to obtain growing shares of supplies from clean power sources directly or by buying credits to offset lingering polluters.
Ontario already has a relatively green generation portfolio, with 38% of the province's power coming from atomic energy plants, 25% from hydroelectric dams and 7% from wind turbines. Since all coal-fired sites have been shut down, just 29% of Ontario electricity is owed to thermal power stations and they burn only the cleanest fossil fuel, natural gas.
In the more heavily populated PJM region, 40% of the power used by 61 million consumers still comes from coal-fired plants, said the Brattle market review. Another 31% is generated using natural gas and 18% originates at atomic plants, leaving only a small minority coming from renewable energy sources.
ITC's construction application includes a preliminary favorable finding on the proposed Lake Erie Connector from the IESO, saying no potential harm to Ontario can be found in the proposal. The filing with the NEB adds that its U.S. counterpart, the Federal Energy Regulatory Commission, has approved a process of soliciting formal bids for transmission capacity.
ITC's project application assures the NEB, "The Lake Erie Connector is being developed as a merchant transmission line project. It will be financially supported by commitments from transmission customers who will purchase capacity on the transmission line. Neither Ontario nor PJM electricity ratepayers will be required to support the cost of developing, operating or maintaining the project."
The proposed Lake Erie Connector is designed as an example of the current best in power lines, high-voltage direct current (HVDC). The technology concentrates big loads into a compact package and uses transformers to convert deliveries into the less efficient consumer product, alternating current.
ITC adds, "Notably an important feature of the project's HVDC technology is that it is bidirectional and power flow and direction can be directly and immediately controlled by operators or automatic control devices to respond to changing system and market conditions."
The NEB filing said, "Accordingly, the project provides optionality for transmission customers to take advantage of daily or hourly changes in market conditions. Likewise, it enhances system operators' ability to respond to emergency and unforeseen events," such as notorious ice storms in Ontario and the Great Lakes and Atlantic regions.