LOCATION:
Canada/USA

INSTALLATION TYPE:
HVDC Transmission Line

PROJECT SIZE:
1,000MW

LENGTH:
110km

STATUS:
Late-Stage Development

FEASIBILITY105%
PERMITTING105%
FINANCING105%
CONSTRUCTION0%
OPERATION0%

PROJECT OVERVIEW

The Project consists of the development of a 110km, 1,000 MW, bi-directional, high-voltage direct current (“HVDC”) underwater transmission line interconnecting the Ontario Independent Electricity System Operator (IESO) and PJM (13 states including Pennsylvania, New Jersey and Maryland). The project would enable transmission customers to more efficiently access energy, capacity and renewable energy opportunities in both markets. ITC Holdings Corp. (ITC) acquired the rights to develop the Lake Erie Connector project from Lake Erie Power Corp. (LEPC) in June 2014. ITC is a subsidiary of Fortis Inc.

MARKET OVERVIEW

Due to differences in resource mix and other market dynamics in the Ontario and PJM markets, energy price differentials have been large and volatile, demonstrating significant market opportunities. Based on historical data, the Lake Erie Connector may offer an expected net margin to shippers of approximately $100 million/year from arbitrage opportunities between the PJM-IESO market clearing prices. While future conditions in Ontario and PJM will evolve, they are projected to remain volatile, contributing significantly to the arbitrage opportunities. Proposed IESO and PJM scheduling protocols and tariffs avoid IESO congestion and PJM wheel-out charges for LEC transmission rights holders.

In PJM, while coal generation decreases (and natural gas and renewables increase), coal and natural gas will continue to account for more than 50% of generation output. In Ontario, by contrast, natural gas will account for less than 20% in 2024, maintaining a structural difference in generation fuel mix that determines market price differentials. Hydro and nuclear resources in Ontario, compared to coal and natural gas in PJM, help drive, and are anticipated to maintain, the observed energy price differentials between the markets.