TDI proposes new $1.2bn HVDC line from Canada to Vermont

The developers of the Champlain Hudson Power Express project on Oct. 31 announced a new, $1.2bn underground HVDC project to run from Canada to the United States.

TDI New England has proposed the 150-mile New England Clean Power Link, which would run from Canada to Ludlow, Vt., delivering 1,000 MW of hydropower to the ISO-New England market. Like CHPE, the New England Clean Power Link would run underground and underwater. The project will be between 300-kV and 320-kV. 

New England Clean Power Link would comprise two six-inch-wide solid state cables. Approximately 100 miles would be buried under Lake Champlain, with the balance buried underground along existing rights-of-way (ROWs). The line would terminate at a converter station in Ludlow and would connect to Vermont Electric Power Company’s 345-kV Coolidge substation.

Though there are several projects proposed to bring Canadian hydropower to the New England market, TDI’s is the only one that runs through Vermont, Don Jessome, president and CEO of TDI, told TransmissionHub.

“The good news is, this is a big market, 30,000 MW, and we’re 1,000 MW, so a small percentage of the market,” Jessome said. “There’s a very strong push by the New England governors to lower carbon emissions. They have very, very aggressive [carbon dioxide] targets, and there’s a recognition that in order to achieve that, the power industry has to increase the amount of low carbon resources, and hydro – particularly Canadian hydro – has been singled out by New England governors as one of many areas that they really want to concentrate on.”

Asked about the economics of the project in the context of the U.S. energy industry today and the potential for offshore wind to bring power into the New England market, the outlook for load growth, and generation retirements, Jessome said one advantage to being privately funded was a certain amount of immunity to the ebbs and flows of macroeconomics.

“Other projects, when they’re cost of service, they have the entire marketplace reviewing them on a constant basis,” he said. “That’s not to say we don’t do detailed economic analysis on a continuous basis, but our analysis is from the private sector’s perspective, so we can take fluctuations in demand or gas prices because we know over a 40-year project life there will be a lot of opportunity during that cycle.”

TDI employed London Economics to perform the economic analysis for the project.

“We believe given the capital structure and cost of our project that this will be an attractive alternative to hydro shippers on our line,” he said.

The CEO said it would take about two years for the project to get traction with respect to regulators, the environmental review process, community outreach and political outreach. At the end of that time, the company will begin negotiations with shippers, he said.

The Blackstone Group, TDI New England’s parent company, is supplying the totality of the development capital for the $1.2bn project, Jessome said.

Though Jessome said he did not know exactly how much development capital the project would require, he indicated it would be in the “tens of millions” to get to financial close. For the $2.2bn CHPE project, Blackstone supplied $40m of development capital, he said.

Because merchant projects such as these require about 25% equity and 75% debt, about $300m of equity will ultimately be needed for the New England line, he said.

Asked about the general attractiveness of the transmission industry to private equity, Jessome said Blackstone, with the experience of CHPE under its belt, is comfortable with the space. Transmission projects, once put into service, are stable, long-term investments, so, like a bond, the interest rate is lower.

“Blackstone understands the development cycle, they understand the risks, they understand the potential reward with a long-term asset,” he said. “They have capital they need to put to work, they have a very successful infrastructure energy company and once they got to know our team very well – and that took four years – they started pushing me to look at other developments. Now I’m in a position where I have an extremely strong development partner who is not only asking me to look at projects in New England but all over the world.”

Project timeline

This fall, TDI plans to file interconnection requests with ISO-NE and Hydro-Quebec TransEnergie to study project electrical characteristics; begin interconnection system impact studies and consult with state and federal agencies and other stakeholders for environmental and other studies.

For the 2013-2014 winter, the company plans to file for FERC negotiated rate authority; complete interconnection system impact studies; and begin project studies for lake and overland segments.

Project design and routing will be finalized in the spring of 2014, and next summer, the company plans to file for a Presidential permit with the U.S. Department of Energy (DOE), an application with the U.S. Army Corps of Engineers, a section 248 petition with the Vermont Public Service Board and for other state permits.

The project is scheduled to enter service in 2019.

Separately, on Oct. 31, the DOE recommended the CHPE project receive a Presidential permit.  

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.