The US$3.8 billion project, dubbed the Champlain-Hudson Power Express (CHPE), consists of two 1GW high-voltage direct current cables running along the bottom of Lake Champlain and down the Hudson River to New York City. One cable would join to the existing transmission system and the second would go on to connect to a converter station at Bridgeport, Connecticut.
The company behind the ambitious plan is Toronto-based Transmission Developers (TDI). Interest in the idea among potential shippers is strong, says CEO Donald Jessome, particularly from hydro and wind energy producers in Canada.
One such company is Nalcor Energy, a provincial energy corporation owned by the government of Newfoundland and Labrador. Nalcor's main focus is in developing the 3GW hydroelectric project in Labrador but it is also looking at the business case for developing an estimated 5GW of untapped wind energy resources in the province. Nalcor CEO Ed Martin says it is working with TDI to explore the possibility of transporting a portion of the hydroelectric output as well as future wind power potential on the CHPE.
Great potential
Although Nalcor is the only generator to go public with its interest in the line, there are other possibilities. CHPE would connect with Hydro-Quebec's transmission system and the utility has made it clear it wants to boost interconnections with the US Northeast.
Wind producers in that province have also been struggling to find new paths to market. Quebec's wind target of 4GW by 2015 has already largely been met. But there were proposed wind projects of more than 5.7GW in Hydro-Quebec's last request for proposals that did not win a contract. Quebec's grid also ties into Atlantic Canada, where the wind resource far outstrips the region's relatively small load, and into Ontario, where thousands of megawatts of wind projects remain on hold awaiting transmission upgrades.
The business case for Canadian generators looking to tap into US markets is an interesting one. New York City and south-west Connecticut are among "the most congested transmission markets in the US and that translates into significant prices", says Jessome. "For a project like this you need to have a combination of things. You not only need to have very high prices, you also need to have very high prices on one end and very low prices on the other."
A recent report from the US Bureau of Labor Statistics found the average New York area consumer paid US$0.199/kWh for electricity in March 2010, about 60% higher than the US average and well beyond Quebec's C$0.0687/kWh price. An analysis by London Economics International, a consulting firm in Boston, says bringing cheaper power into the region on the CHPE would save consumers in New York City, Long Island and the Lower Hudson Valley more that US$10 billion over ten years.
Job protection
States in the region also have some stringent renewable energy standards although, with green jobs on the line, it remains to be seen how receptive they will be to using foreign electricity supply to meet them. But Jessome points out that the New York has a peak demand of about 35GW, while New England is a 20GW market. "These are very large markets that are meeting some tough standards that are probably going to be much more stringent, particularly when some form of a cap-and-trade or taxing system comes into play for carbon," he says. "You have to have multiple scenarios. So, although this is a significant-sized project, in the context of these markets it is still certainly not taking away all of the opportunities for other indigenous supply to also join in."
Development of the renewable energy industry in the US Northeast, however, is bound to be affected if the CHPE goes ahead, particularly if large hydro counts towards meeting renewable energy portfolio standards, says Tim Stephure, an analyst with Massachusetts-based Emerging Energy Research (EER). "The Northeast is one of the few parts of the country that hasn't been able to build a renewables portfolio very close to its targets - they are struggling," he says. "Power prices are very high in the Northeast and so this idea of getting access to cheaper renewable resources, be it hydro or maybe even wind from Quebec, could be very interesting in how the renewables market develops there."
TDI has to pass three major permitting processes before it can move ahead with the CHPE. An application was filed in January for an environmental assessment under the US National Environmental Policy Act, which is part of getting a presidential permit for the line. TDI also filed an application with the New York State Public Service Commission in March and will apply for a permit from the Connecticut Siting Council in the summer.
Jessome expects the line to avoid a lot of the negative concerns traditionally associated with new electric transmission projects. The cables will be hidden underwater for most of the 570 kilometre route, except for at least one spot where it will be buried underground, following a railway right-of-way to avoid a particularly polluted stretch of the Hudson.
TDI needs to have all its permits in place by September 2011 if it is to remain in the running for federal stimulus funding under the US Department of Energy's Loan Guarantee Program for transmission projects, which could cover up to 80% of the cost of the project. "We are working to get to as high a percentage as we can," he says.
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