National Grid to make $40m equity investment in Clean Line Energy

National Grid USA will make a $40m equity investment in Clean Line Energy Partners, which will use the funds to advance the development of its four high voltage direct current transmission projects that will connect wind energy resources in the United States to communities and cities with demand for low-cost clean power.

National Grid’s subsidiary, Grid America Holdings, will make the investment in Clean Line with corporate funds, the companies added on Nov. 27. The transaction is separate from National Grid’s existing regulated businesses in the U.S. and the United Kingdom.

Under the transaction’s terms, National Grid will be able to acquire a “significant” ownership stake in Clean Line’s HVDC projects. The companies also said that the transaction’s closing is subject to regulatory approvals.

During a press conference in Washington, D.C., on Nov. 27, Clean Line President Michael Skelly said the existing investors in Clean line will continue to invest alongside National Grid, which will have two of five board seats.

Development capital is always a good thing to obtain, he said, adding, “[T]here’s risk involved in what we’re doing so [National] Grid is deploying resources around that development and around that risk equation.”

National Grid is also providing technical expertise. Skelly added, “There are not that many players globally with experience in HVDC technology and [National] Grid has a lot of the experience that’s out there.”

National Grid USA President Tom King said during the press conference that this is an investment up front.

“Clean Line will continue to have ownership and control over developing the projects and as the projects develop, we have the optionality to continue to enhance the investment as well as ensure that we are, as an investor, an active participant both in the technology and the development and operations,” he said. “All of that can evolve as the projects evolve.”

Skelly said it is important to think about Clean Line’s transmission development model as it “is basically develop it, put the pieces together, get the permitting, put together the technical study, all the legal work and … that’s really what this $40m – and the additional investor funds – will go toward.”

The U.S. needs to create optionality around various energy futures, he said. “[O]ne of the most attractive things about independent transmission development is we’re creating optionality around new energy possibilities and the cost for that optionality is borne by private investors,” he said.

King built on that, saying: “There isn’t a silver bullet out there relative to resources and energy needs. We need to be developing and investing in it all. … This project is yet again an example of that, of ensuring that the infrastructure and the development of those resources in the future are available and being invested in now to be available in the future.”

Skelly noted that a cleaner energy mix requires infrastructure investment. “There’s a lot of support for clean energy in this country and that support will show up somewhere along the way in terms of favorable policy,” he said.

Each project could deliver ‘equivalent of three Hoover Dams’

Skelly said that each of Clean Line’s four projects, which include the Grain Belt Express Clean Line, could deliver 3,500 MW “of new wind projects that ordinarily could not get built because these are resources that are effectively trapped in the middle of the country and each of them would deliver the energy equivalent of three Hoover Dams.”

He noted that all the projects move along at different paces and “it’s still a little early to say which one we’ll pull the trigger on first.”

Skelly also said that Clean Line has worked “across the country to help prove out the thesis that HVDC lines are part of the right technical answer if you want to get a lot more energy on our grid.”

HVDC lines are more efficient in terms of right-of-way usage and line losses, he said.

Clean Line has also worked with regional transmission organizations, incumbent utilities, environmental groups, wind producers and load serving entities.

“[F]rom our perspective, we really believe that the right way to put these projects together is through a stakeholder intensive approach of taking into account and working really closely and listening closely to county officials, state officials…and other folks who will be impacted by this new infrastructure,” Skelly said.

While projects like the ones Clean Line is working on “unleash new economic possibilities,” they also bring impacts.

“[I]t is our job to make sure that those impacts are minimized as much as possible and that we put our projects together in the most sensitive way” by, for instance, building the supply chain in all the states affected, he said.

Transmission development is a long-term process, he said, noting that among the things motivating Clean Line to push forward “is the dramatic improvements in the cost, particularly on the wind technology side.”

Skelly said, “[W]e believe that as the industry continues to mature and more technology is deployed and more innovation introduced into the wind space, that this low-cost energy will make the investments in transmission infrastructure even more compelling.”

National Grid is a subsidiary of National Grid plc.

About Corina Rivera-Linares 3063 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.