Don't miss out
Every morning, the Energy News Network compiles the top stories about the clean energy transition and delivers them to your inbox for free. Sign up today!
A Michigan-based transmission company is moving forward with plans to connect the PJM grid system in Pennsylvania and the Canadian energy market with a 73-mile line along the floor of Lake Erie.
ITC Holdings Corp., whose subsidiary is leading the Lake Erie Connector project, says it would be the first direct connection between PJM and the Ontario Independent Electricity System Operator.
As a 1,000 MW bi-directional line, officials say it would give both markets added reliability and diversified portfolios, while at the same time lowering prices for ratepayers. ITC also says that the project is partly driven by potential federal emissions regulations and state renewable energy mandates.
Before selling the development rights of the project to ITC, a former developer had pegged the cost of the project at $1 billion.
“When we came across the Lake Erie project, the natural geography piqueed our interest early on,” said Terry Harvill, ITC’s vice president of international and merchant development.
A unique opportunity
Harvill said the company executes on “very few” proposed transmission projects because many don’t have “sustainable economics” over time, given fluctuating load patterns or new generation being built instead.
But the Lake Erie connection makes sense based on the lack of existing, efficient transmission there, he said. The line would connect substations in Erie, Pennsylvania and Nanticoke, Ontario.
“Even today, parties are selling power between the two markets in a fairly inefficient manner,” Harvill said, with the sales taking place through New York or through the Midcontinent Independent System Operator (MISO) market to the west. Those connections are reportedly congested or unavailable during peak hours.
“We think the project — as far as merchant transmission projects go — is going extremely well.”
Earlier this week, ITC started soliciting energy providers for transmission rights and capacity on the line. The company hopes to receive state, federal and provincial permits and start construction in 2017. Commercial operation would start in 2019.
“Anytime you provide a link into a different system, you’re providing a reliability benefit,” said PJM spokesman Ray Dotter. “You also have the ability to receive lower-cost power or power in an emergency. It works the other way, too: PJM suppliers could support the Ontario [market] in times of need.”
Harvill said the PJM and Ontario markets differ mainly on structure and in the makeup of their portfolios. Also, with less expensive electricity in Ontario, the connection can move cheaper power from the north to the south.
“For the recent history and going into the future, there is an energy arbitrage opportunity between the two markets,” he said.
The line can also be a hedge against potential capacity shortfalls due to power plants closing to comply with proposed federal carbon rules, Harvill said. It could more easily move renewable energy — like Ontario’s strong hydropower resources — to help U.S. states comply with renewable portfolio standards.
Ontario has strong hydroelectric and nuclear resources — the latter of which is coming offline “fairly shortly,” Harvill noted — while the PJM portfolio carries more natural gas and coal.
Dotter said natural-gas resources from the Marcellus shale may be of interest on the other side of the Great Lakes.
“Especially with the abundance and growth in PJM of natural-gas fired generation, it opens up the possibility for suppliers to be able to export into Ontario as well,” he said.
“From Ontario’s perspective, I think it’s more of a reliability hedge against anything else,” Harvill added. “The profiles of the two markets are so different that putting them together increases the diversity of both markets.”