Amid uncertainty about grant funding from the U.S. Department of Energy, FERC has approved a guarantee for National Grid to recoup all prudently incurred costs for the company’s portion of the Power Up New England transmission project if the project is terminated due to factors outside the company’s control (ER25-866).
The Power Up project aims to build two interconnection points for offshore wind projects in New England. Spearheaded by the Massachusetts Department of Energy Resources (DOER), the project is supported by the six New England states and includes proposed upgrades to transmission infrastructure owned by National Grid and Eversource.
In 2024, DOE’s Grid Resilience and Innovation Partnerships (GRIP) program — created by the Infrastructure Investment and Jobs Act (IIJA) in 2021 — awarded a $389 million grant to the Power Up project, estimating the project would create $1.55 billion in electricity savings. (See DOE Announces $2.2B in Grid Resilience, Innovation Awards.)
National Grid has estimated its portion of the project — intended to facilitate the interconnection of up to 2,400 MW of offshore wind at Brayton Point in southern Massachusetts — would result in $1.2 billion in electricity savings for the region.
However, the Trump administration has taken a hostile stance to the offshore wind industry and paused the disbursement of IIJA funding that it deemed to undermine the policy priorities outlined by the administration.
The Grid Deployment Office (GDO) lists the project’s funding status as “selected,” which indicates that DOE has not issued the final funding award. A DOE representative confirmed this status is up to date.
The Massachusetts DOER — the lead applicant for the project’s application for grant funding — replied through a spokesperson: “The federal grant for Power Up New England has been conditionally awarded to the New England states, obligating the $389 million. We secured these funds through an agreement with the U.S. Department of Energy. We will continue to coordinate with our fellow New England states as we work through the final phases of the award with DOE.”
The GDO declined to comment.
Significant risks remain even if the grant is awarded by the Trump administration; the funding is contingent on the project coming online within eight years of the finalization of the federal funding agreement. In its filing with FERC, National Grid acknowledged that losing the federal funding would increase the risk of cancellation. (See First FERC Filings Shed Light on New England OSW Tx Project.)
In response to the heightened risks, National Grid and Eversource have requested FERC authorization for an “abandoned plant incentive” allowing the companies to recover all prudently recovered costs on their portions of the project if it is canceled. The costs of the project will be allocated to customers in ISO-NE on a load ratio basis, with a base return on equity (ROE) of about 11%. The companies cannot earn a return an ROE on the portion of the project covered by the federal grant.
The New England States Committee on Electricity (NESCOE) supported both filings in accordance with agreements between NESCOE and the companies. These agreements authorize the states to cancel the project if the expected costs increase and require the companies to make annual reports on incurred and projected costs.
FERC wrote that National Grid has “shown that the project faces risks and challenges beyond the control of applicants that could lead to the project’s abandonment, and that approval of the Abandoned Plant Incentive will address those risks and challenges.”
However, the commission emphasized that any recovered costs must be prudently incurred and highlighted potential uncertainty around the federal funding for the project.
“The commission’s prudence determination could consider the reasonableness of investment decisions given the status of potential obstacles to project development that were reasonably foreseeable including DOE grant funding availability,” FERC added.
In its filing Jan. 6 to FERC, a representative of National Grid said the funding award is slated to be executed “in the early months of 2025.”
In a concurring statement with FERC’s ruling, Chairman Mark Christie wrote that, because the project is driven by state clean energy policies and targets, his concurrence depended on the states’ unanimous agreement “for their consumers to bear the costs of this project using a cost allocation formula to which they all agreed.”
While the majority ruling noted that National Grid has provided clear evidence the project would create significant congestion cost savings, Christie stressed that the Power Up project “is a public policy project, not a reliability or an economic project, even if there are some ancillary reliability and congestion benefits as there always are with any project.”
“As we move into the Order No. 1920-A compliance process,” Christie wrote, “this is an excellent example of the opportunity and authority granted to states in that rule to agree to jointly share costs of such projects.”
FERC has yet to rule on a similar request made by Eversource, and issued the company a deficiency letter in February requesting more information on potential reliability and cost benefits of the company’s part of the project (ER25-747).
