A Toronto entrepreneur announced plans last week to build a 1,000 MW merchant transmission line to deliver power from Ontario to PJM.
The “Lake Erie CleanPower Connector” would run under Lake Erie for about 60 miles from Nanticoke, Ontario to Erie County, Pennsylvania.
The HVDC project is expected to cost $1 billion and create 300 jobs over three years of construction. A PJM feasibility study indicated the project would also require about $410 million in upgrades to FirstEnergy’s 345 kV system.
Price Disparity
John Douglas, CEO of developer Lake Erie Power Corp., said the project is designed to capitalize on Ontario’s surplus power and avoid often-congested transmission lines into Michigan and New York.
In August, locational marginal prices at Nanticoke averaged less than $28/MWh (in U.S. dollars), about $6 below the average LMP for PJM’s Penelec zone.
The biggest price disparity was in hours ending 14-17, with a differential of more than $10/MWh. (See chart)
Douglas says the project also will help U.S. utilities meet their renewable energy portfolio goals. In 2012, the Independent Electricity System Operator of Ontario (IESO) generated 25% of its power from hydro and wind. Most of the balance was split among nuclear (56%), natural gas (14.6%) and coal (2.8%).
With connections to Manitoba, Quebec, New York, Michigan and Minnesota, Ontario currently can export up to 4,800 MW. In 2012, the province had net exports of almost 10 TWh.
Months of meetings
Lake Erie Power has been meeting for months with federal and state regulators and local politicians and fishermen to smooth the way for the project.
The company filed an application with the Federal Energy Regulatory Commission in July (docket #ER13-1979) requesting permission to charge negotiated rates for transmission service on the route. Although the proposal announced last week envisions two cables with 1,000 MW of capacity, the FERC application describes the project as “up to” four lines with a 2,000 MW capacity.
The company hopes to begin construction in 2015 with financing from Toronto-based JCM Capital, a private investment firm focusing on renewable energy projects.
The line will use two HVDC electric cables, each approximately six inches in diameter, a technology similar to that used in the Cross Sound project connecting Shoreham, Long Island and New Haven, Connecticut.
The company’s preferred route would reach shore in Girard Township, Erie County. The line would continue underground about seven miles south of the lake along an abandoned railroad right of way to a $200 million AC converter station adjacent to Penelec’s Erie West substation.
Previous Projects
Douglas has developed wind, hydro and transmission projects over more than a decade following a career in corporate finance and investment banking.
He sold wind farm developer Ventus Energy Inc. to GDF Suez S.A. for $200 million in 2007. He sold another proposed HVDC project — a 1,000 MW line from Montreal to New York City under the Hudson River — to the Blackstone Group LLP in 2010. That project is seeking regulatory approval.
