Southeastern electricity markets are predominantly served by large, vertically-integrated and regulated utilities. Unlike many other parts of the country, the Southeast also lacks a single regional transmission organization (RTO) or independent system operator (ISO). This creates some unique attributes of the electricity markets in the region as compared to other East Coast states.
A Different Approach
The Southeastern Wind Coalition believes that utilities will play a critical role in the success of the wind industry in this region. In other parts of the U.S., the most common market mechanism for land-based and offshore wind projects has been the power purchase agreement (PPA) model, where a private developer builds and owns a wind farm and has a long-term contract with a utility to buy the energy generated. That approach may be less attractive in the Southeast. Instead, we are likely to see some level of utility ownership in projects here in the Southeast.
Having more direct involvement in offshore wind projects from multiple utilities in the Southeast may allow for several benefits that can reduce the cost to ratepayers and increase the job growth and economic development benefits to the region, including:
- Enable a coordinated, regional approach
- Allow for larger-scale deployment, improving economies of scale and reducing cost
- Accomodate longer-term, more predictable development plans which reduces cost
- Improved supply chain efficiency and stability by avoiding boom-bust cycles
- Greater ability to attract and retain new supply chain and manufacturing jobs to the region
Lessons from Europe
In many ways, the utility structure in the Southeast may justify a project approach to offshore wind in this region that is more similar to the project development model in Europe, where large-scale development projects led by consortia of utilities, developers, and turbine manufacturers are common. Southeastern states could benefit significantly from the lessons learned by European developers and utilities.