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Offshore Transmission Buzz

Another investor has appeared for an Atlantic coast transmission backbone that would facilitate offshore wind.  This time, it’s the fourth-largest grid operator in Europe.

The Belgian Elia System Operator NV is investing in the $5.5 billion power transmission project off the U.S. Atlantic coast that will link 6,000 megawatts of offshore wind farms.

The company acquired a 10 percent stake in the first segment and 5 percent of the remaining segments of the Atlantic Wind Connection. The size of the investment was not disclosed. Just as important, perhaps, the company is experienced in the offshore transmission markets in Europe, which the American partners lack.

The undersea power lines off the coasts of New Jersey, Delaware, Maryland and Virginia will be developed in five segments.

But just this month, the Department of Interior issued its draft environmental impact assessment for offshore wind that proposes to govern much of the area that the proposed transmission backbone would serve.

The project, first proposed last fall, generated instant buzz in part because of the partnership backing the $5.5 billion plan, which includes Google. Tokyo-based trading company Marubeni Corp. Swiss-based clean energy investor Good Energies are also backing the project, and Google Inc. is providing 42 percent of the pre-construction equity.

“We look forward to joining the shareholders of, and to bringing our expertise to, this challenging and innovative project. We share their vision regarding the strategic importance of carbon-free production of electricity and massive integration of wind energy into the grid. The cooperation and synergies that we will develop together will benefit a greener planet”, said Daniel Dobbeni, CEO of Elia, and also chairman of the European Network of Transmission System Operators for Electricity (ENTSO-E).

The Federal Energy Regulatory Commission in May granted a 12.6 percent return on equity for the project, less than the 13.6 percent sought by the developers.

The Elia Group is the fourth largest Transmission System Operator (TSO) in Europe and operates the electricity transmission system in Belgium and the electricity transmission system in the North and Eastern part of Germany through its daughter company 50Hertz Transmission.

Elia simultaneously entered into a long term consultancy contract with the AWC project developer, Atlantic Grid Development (“AGD”). Under this contract, the group will bring to the AWC project its expertise in the design and development of offshore/electricity-highways in Europe; expertise gained namely in the North and Baltic seas, off the shores of Belgium and Germany.

Elia is also one of the founding parties of a consortium between seven major European companies all active in offshore transmission, which provides unique turnkey solutions for offshore transmission.

A recent study just released extols the potential of offshore wind energy with a potential for 127 gigawatts, at a reasonable costs and with significant economic development. The potential using very conservative methods, to show that offshore wind on the Atlantic coast could provide much greater energy potential than offshore oil and gas combined.

Some Euro knowledge would needed to come close to that potential.

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