National Grid no longer pursuing the Twin States Clean Energy Link

March 7, 2024
John Dalton

National Grid announced in early March that it was no longer pursuing the development of the Twin States Clean Energy Link (Twin States), a 1,200 MW HVDC interconnection between Quebec and Southern New Hampshire that would support the bi-directional flow of power between Quebec and ISO-New England. In October, the U.S. Department of Energy’s Grid Deployment Office (GDO) announced that the project was one of three that had been awarded capacity contracts as part of its Transmission Facilitation Program (TFP) whereby the GDO enters into capacity contracts to support the financing of major transmission projects. Under the TFP the GDO will remarket the capacity to third parties.

National Grid indicated that it “has determined that the project is not viable at this time.” This is not particularly surprising. The project’s economics are based on the bi-directional flow of power and ideally there would be parties holding transmission rights for the flow of power in both directions. The challenge is that there isn’t a competitive wholesale electricity market in Quebec. Therefore, there are few if any potential counterparties outside of Hydro-Quebec that are interested in holding transmission rights that would allow the flow of power from ISO-New England to Quebec or Quebec to ISO-New England. Other than Hydro-Quebec and the limited number of parties that hold transmission rights on the Hydro-Quebec TransEnergie transmission system, Twin States transmission rights holders would be unable to source energy from the Northern terminus in Quebec or deliver energy to that terminus. Furthermore, only Hydro-Quebec has access to the immense storage capacity offered by its hydroelectric reservoirs that enables its ability to arbitrage price volatility in ISO-New England. While this represents an attractive opportunity for Hydro-Quebec, this value is limited by the large volume of energy storage projects that are proposed for ISO-New England.

Finally, Hydro-Quebec will have upwards of 10 GW of interconnection capacity to adjacent electricity markets with the commercial operation of the New England Clean Energy Connect and the Champlain Hudson Power Express. Therefore, the value of an additional 1,200 MW interconnection with ISO-New England is further constrained. Nonetheless, ultimately if there’s going to be a transmission rights holder for Twins States it is likely to be Hydro-Quebec.  The value of this project will increase as the penetration of variable output resources in New England increases. #Transmission