Powerful partners: Why Blackstone-backed APT feels it has winning play in off-shore wind sector

Blackstone/APT feels collaborating with unions, or energy companies will help New Jersey become sector leader on East Coast and beyond

CEO Andy Geissbuehler is eager to tell you how Atlantic Power Transmission’s proposal to the New Jersey Board of Public Utilities to provide transmission services for the state’s burgeoning offshore wind energy sector is stronger than the 12 other companies that answered the RFP.

He wants to tell you how the proposal comes with the financial backing and support of Blackstone, the global investment group with nearly $1 trillion assets under management, assuring that financing and a long-term commitment to the project are there …

From left are: Kirk Meche of Morrison Energy; Greg Lalevee, business manager, International Union of Operating Engineers Local 825; Kurt Summers, a senior managing director at Blackstone; and Andy Geissbuehler, CEO of Atlantic Power Transmission. (Photos courtesy Atlantic Power Transmission)

How the proposal of three cables supporting 1,200 megawatts of electricity is more than enough to meet the state’s request — and how it is easily scalable if and when the demand increases …

How the proposal comes with the support and partnership of four companies well-versed and experienced in the process, as well as the unions that will build it …

How the proposal is environmentally friendly, never interrupting the shoreline when it makes its way on land — and how it then follows the flow of railroad tracks to a substation in South Brunswick when it does …

And how the proposal comes with cost certainty for the state and ratepayers, promising to have the lowest cost of all bids, now and in the future.

The proposal, however, is about so much more than that, Geissbuehler said. 

The plan revolves around setting the stage to ensure that New Jersey is the leader in all aspects of the offshore wind-energy sector moving forward — everything from job training to supply chain dominance.

“I always say, ‘We’re on a mission, not on the project,’” he said. “The mission is really to drive the energy transmission transition for the East Coast, and specifically for New Jersey.

“Blackstone’s very comprehensive engagement and track record in large infrastructure projects and energy transition puts us in an environment where we can go much broader. It’s ultimately about industry building.”

Major manufacturing facility proposed

Blackstone-backed Atlantic Power Transmission, Morrison Energy announce intentions to build 5,000-ton substation foundation jackets — if APT is awarded transmission project from BPU. See story here.

Kurt Summers, a senior managing director at Blackstone who serves as the head of public-private partnerships in the infrastructure group, agreed. 

Blackstone, which has infrastructure projects across the globe, aims to help New Jersey elevate its profile, he said.

“The goal is not just to position New Jersey with its own projects, but to leverage this moment to build a workforce that is able to service everything that is going to happen up and down the East Coast,” he said.

Blackstone and APT feel they can do this in a variety of ways.

Blackstone’s clean energy commitment

Blackstone’s infrastructure group brings more than just $30 billion in assets to the space — it brings a long-term commitment to energy transformation, said Kurt Summers, a senior managing director at Blackstone who serves as the head of public-private partnerships in the infrastructure group.

“Blackstone’s commitment into the energy transition space is effectively a $100 billion commitment over the next decade,” he said. “Wind, solar, offshore and onshore wind, hydrogen, ammonia, carbon capture, development transition — literally the entire spectrum and value chain is where we want to be invested.”

Among the investments is a controlling interest in Invenergy, which is constructing the largest renewable and clean energy transmission line in the country, a $20 billion capital project spanning four states, with wind and solar connecting to different regional transmission organizations.

Invenergy also was just awarded 83,976 acres of seabed by the U.S. Bureau of Ocean Energy Management, one of the largest awarded in the New York Bight offshore wind lease sale.

Another company, Tallgrass, has a $35 billion pipeline to invest in energy transition.

Part of the proposal involves creating a facility that will manufacturing the massive offshore jackets for substations to the state, a project that Blackstone and APT will take in partnership with Morrison Energy and labor unions. It’s part of a $50 million investment that Blackstone is making in economic development. 

Blackstone and APT also have pledged to develop South Amboy Pier Park, which will offer recreation and entertainment options near the landing for the soon-to-be-developed ferry service.

Blackstone and APT officials estimate their efforts will be worth $1 billion just toward Middlesex County, where its onshore efforts will be centered — as well as untold billions more to the state.

The potential of this project is enormous. 

Perhaps that’s why the proposal from APT is one of 80 the BPU is reviewing. The expectation is that the BPU will select one in the fall — but, it is not bound to do so. It could authorize a number of proposals or none at all.

ROI-NJ recently spoke about the proposal with Geissbuehler and Summers. Here’s a look at the conversation, edited for space and clarity.

ROI-NJ: Let’s start with the financing, which always is the top concern in multibillion-dollar projects. Explain the commitment of Blackstone’s infrastructure group.

Kurt Summers: The group is a $30 billion asset under management vehicle that has invested in a total enterprise value of $110 billion of companies. And we’re a permanent capital vehicle. So, we look for opportunities to partner with management teams, like Andy’s, because we’re set up effectively to be generational holders, where we never have to sell an asset. 

Our strategy is to build and invest in core assets that we can hold for 30 or 40 years and build greenfield assets that provide public good. That requires counterparties, like APT, who can be there through the entire process. Supporting Andy and his team is a tailor-made situation for that strategy.

What’s unique about our approach versus others is that this is a permanent capital vehicle. We are never a forced seller of an asset.

ROI: The APT proposal certainly has a lot of partners. Let’s start on the production side, where the company is partnering with Hitachi Energy (for energy conversion), Aibel (for the offshore platform) and Nexans (for the offshore and onshore cables) to build the transmission vehicle.

Andy Geissbuehler: I always say, people want to know who their neighbors are going to be. That’s why we aligned and selected our alliance partners before placing the bid. 

The typical developer will say, ‘Here’s our bid, and, once we’re awarded, we’ll figure out how to do it.’ We went the other way. We are partnering with global and local market leaders so the stakeholders, the local communities, the ratepayers will know exactly who will build this transmission solution — and who will own and operate it for the next 40 years. That creates the sense of community, and also predictability. We’re super-lucky to be in this bigger Blackstone environment, which really makes APT a very credible and secure route to partner with.

ROI: The partnerships also extend to the unions, including the Eastern Atlantic States Regional Council of Carpenters, International Union of Operating Engineers Locals 825 and 25, Iron Workers Local 399 and International Brotherhood of Electrical Workers Local 456. Describe how that impacts your proposal — and how the relationship may be different than a normal union partnership.

KS: Our approach when we look at any investment is, ‘Who are the stakeholders that have a vested interest here — and how can we partner with them?’ That approach is unique in any capital investment strategy, and certainly in this space. 

Phil Diaz and Tim Warring, center left and right, respectively, from the Eastern Atlantic States Regional Council of Carpenters, give Kurt Summers of Blackstone Infrastructure, left, and Kirk Meche of Morrison Energy, right, a tour of the Carpenters’ Hammonton Training Facility.

We’ve partnered with them in countless projects now around the country. It’s a close working partnership that starts with a commitment to the belief that, when you marry labor and capital, you get the best outcome for, really, any large project, especially infrastructure projects.

ROI: That marriage is behind APT’s commitment of $50 million toward economic development — some of which will go to the proposal to develop (with Morrison Energy and union partners) a manufacturing facility in New Jersey that potentially could produce the massive, 200-foot-tall, 5,000-ton jacket foundations that are used to support offshore wind substations. 

Talk about how bringing this manufacturing to New Jersey — the jacket foundations currently are produced only in Europe or Asia and have to be shipped to the U.S. — would further help New Jersey establish itself as a supply-chain leader on the East Coast for the emerging offshore wind energy sector.

High five

We asked Atlantic Power Transmission CEO Andy Geissbuehler why the state should select his company’s bid to install the transmission cables that will be a huge part of New Jersey’s efforts in wind energy moving in the coming decades. He gave five reasons:

  1. Blackstone: APT has a long-term commitment from an investor with broad perspective and very comprehensive commitment to energy transition.
  2. Workforce development: APT is making a $50 million commitment to train and development the next generation of workers as well as developing a facility that will build the massive jacket foundations for substations — something that is not produced anywhere in the U.S.
  3. Ratepayer certainty: APT is offering intergenerational equity of cost recovery — so the cost will be spread out over 40 years. The company feels it will have the lowest cost over Year One and for the length of the project.
  4. Economic and environmental efficiencies: APT’s proposal calls for three identical 1,200-megawatt cables that will come to the shore through Raritan Bay and without disrupting the Shore line. Adding a fourth would be easy.
  5. Community and union partnerships: Collaborating with unions, municipalities and economic development agencies, such as the Economic Development Authority and Choose New Jersey, as partners will lead to a smoother construction process.

AG: This is something that goes way beyond our New Jersey project. This is about starting a large-scale foundation industry on the East Coast. 

KS: The goal is not just to position New Jersey with its own projects, but to leverage this moment to build a workforce that is able to service everything that is going to happen up and down the East Coast. That takes training and skill development. 

Andy and his team have identified an opportunity to partner with the (Economic Development Authority)’s Wind Institute, with local academic institutions in Middlesex County, including the vo-tech and county college, as well as our partners in labor, to build a permanent skilled workforce to service what is one of the fastest-growing industries in the country. That’s why we’re so excited about this investment. 

If you look over the next several decades of where our country can go in this space, we can help position New Jersey to be the leader of the talent that executes it going forward.

ROI: Let’s get to the project itself. The state has decided essentially to create one transmission service (that is, one vehicle to bring offshore wind energy onto the land and into the grid — as opposed to each wind farm having its own delivery system). It’s universally viewed as the right call. And it has led to 13 companies bidding for the project. What are the key features of your proposal that make you feel it is the best solution?

AG: We’re proud of its simplicity and its reliability. It’s three identical 1,200-megawatt cables that will come to the Shore through Raritan Bay, with landfall at the South Amboy industrial pier. We’re not embarking on the Shore, it will be totally underground. The first time we come to the surface is next to the substation in South Brunswick, where we control the 40-acre piece of land and will build three onshore converter stations. 

The solution we’re providing is state-of-the-art technology. Our alliance partners are currently building precisely this solution for Dogger Bank (in the U.K.), currently the world’s biggest offshore wind farm. So, we have very predictable, proven technology delivered by a team of companies who have worked together before. 

ROI: Talk about the environmental impact.

AG: Because we are using the three-in-one approach, with three independent circuits using the same route, we disturb the environment once, not three times. And, on land, we’re not opening roads, we’re using an existing easement of rail, which will minimize the impact to communities.

This three-in-one solution also provides economic benefits, because it has tremendous economies of scale. The second and third circuit is substantially less costly to build and to source — and we could easily do a fourth circuit, because we are going along the rail line and we could have two on both sides.

ROI: Talk about the proposed South Amboy Pier Park. 

AG: We have budgeted funds to make this really nice, but it will be a joint project, where we will collaborate with the local communities. We’re not putting any structures up; there will be nothing industrial. It will be a nice park in the same area where South Amboy is building their ferry terminal, which, I think, that will be really a nice improvement to that whole area.

ROI: All this being said, every project comes back to one key detail: money. How are you going to make this project come in on budget?

AG: We have ratepayer cost certainty. We have a 40-year fixed-rate approach — and we’re the only bidder with that model. We’re able to provide what we call intergenerational equity of cost recovery. That means we’re not shocking everyone in Year One. We actually have the lowest Year One impact and the lowest total cost. Basically, we are shielding the ratepayers from surprises during construction.

We are experienced construction people, fully aware of the challenges. One of our strengths is our ability to cope with whatever unexpected issues we’re certain to face with the commitment and the promise to make it right. We will deliver as promised.

Conversation Starter

Reach Atlantic Power Transmission at: atlanticpowertransmission.com or call 347-463-5453.