TDI New England’s proposed New England Clean Power Link will generate nearly $400 million annually in new economic activity for the New England region as a whole during the first 10 years of commercial operations, according to a new report by London Economics International.
As noted in the report, the 150-mile underwater and underground HVDC transmission line, to be located in Vermont, will deliver 1,000 MW of clean, low-cost energy into the New England wholesale power market.
“The New England Clean Power Link is an innovative, privately financed project that will create hundreds of new jobs, save consumers millions of dollars and spur economic growth across Vermont and the wider region,” TDI New England CEO Donald Jessome said in a June 11 statement. “The significant energy savings means more money in the pockets of businesses and homeowners — savings they can then reinvest in communities throughout New England, creating long-term permanent job growth and a stronger regional economy.”
Cable manufacturing could begin as early as 2015, along with some site preparations, a company spokesperson told TransmissionHub on June 11, adding that construction would begin in early 2016 and be completed by the end of 2018.
The project is expected to begin service in early 2019. The company filed its application for the Presidential permit from the U.S. Department of Energy last month and will apply its application for approval from the Army Corps of Engineers next fall. The spokesperson also said that the company will file for the Vermont 248 siting permit by the end of this year.
London Economics, an economic, financial and advisory firm headquartered in Boston, Mass., noted in a disclaimer that it was engaged by TDI New England to develop an economic impact analysis of the proposed project, adding that the report is based upon current data concerning economic conditions in New England and on current information available concerning construction and operation of the proposed project. Additionally, the report is not intended to be a complete and exhaustive analysis of the proposed project.
London Economics analyzed the potential economic benefits of the proposed project in terms of the employment and gross domestic product (GDP) impacts to Vermont and the rest of New England, using the PI+ model developed by Regional Economic Models Inc. (REMI). That model is an economic forecasting model that is widely used in the public and private sectors to simulate the dynamic and interactive effects over time and across industries that result from large investments, policy changes and infrastructure projects like the Clean Power Link, according to the report.
The model generates year-by-year estimates of the total regional effects of any specific policy initiative or large investment. London Economics also said that the model used for the analysis was a 70-sector, state-level model that covers the entire New England region. Those sectors included forestry and logging, fishing, hunting and trapping, as well as oil and gas extraction and nonmetallic mineral product manufacturing.
The model incorporates several modeling approaches, including input-output, computable general equilibrium theory, econometric equations and new economic geography theory to create a comprehensive model that understands detailed interrelated changes in a regional — or state — economy.
London Economics also noted that the model, which is used by government agencies and others, estimates comprehensive economic and demographic effects in wide-ranging initiatives, such as economic impact analysis; policies and programs for economic development, infrastructure, environment, energy and natural resources; and state and local tax changes.
Regarding modeling inputs, London Economics noted that TDI is expecting the project to undergo a 36-month construction phase, starting in 2016 and finishing by the end of 1Q19. The operating life of the project, beginning in 2Q19, is expected to go out 40 years or even longer. For its analysis, London Economics added that it has focused on the first 10 years of operation. Given the significance of the installation costs for the project, more than $80m in capital costs for the project will be spent in Vermont to build and install the project.
Additionally, the project will bring, on average, 140 direct construction jobs annually to Vermont during the construction period. Once commercial operations begin, the project is expected to reduce the wholesale market price of energy in ISO New England (ISO-NE) for the benefit of consumers.
The reduction in retail electricity costs to New England electricity customers is estimated to be about $195 million per year on average for the first 10 years of commercial operation, or 2019 to 2028, according to the analysis. Electricity cost savings are projected based on simulation modeling of the ISO-NE wholesale market — assuming a 95 percent utilization rate on the project. On average over the 10 years modeled, the project produces more than $1/MWh reduction in annual average energy prices across the region.
Based on the analysis, the project is expected to create on average more than 640 direct, indirect and induced jobs in Vermont during its 36-month construction phase and 2,000 jobs across the region, including Vermont, in the first 10 years of commercial operation.
That local employment and spending will expand state economic activity, as measured by GDP, by $58 million per annum on average, or about 0.2 percent of Vermont’s GDP based on 2012 GDP levels.
London Economics added that its analysis suggests that the economic activity that will be generated by the construction phase will ripple through the rest of the region. That phase will generate on average more than 850 jobs, including 670 indirect and induced jobs, across the region, including Vermont, and will increase New England’s regional GDP by about $78 million per year.
Furthermore, during the first 10 years of commercial operation, London Economics estimates that Vermont’s GDP would increase by an average of $30 million per annum due to reduction in energy costs, and an increase in jobs and spending within Vermont for continued operations and maintenance of the line.
Based on London Economics’ analysis of those reduced electricity costs using the PI+ model, together with the ongoing local spending by the project for operations and maintenance of the project, the project will produce an average of more than 2,000 direct, indirect and induced jobs across the region during the first 10 years of commercial operation and lead to an increase in regional GDP by an average of about $400 million per year.
This article was originally published on TransmissionHub and was republished with permission.
Lead image: Transmission lines via Shutterstock