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State Adopts Preliminary Rules to Govern Offshore Wind Market

To gain approval, offshore wind projects must demonstrate a positive net impact on New Jersey's economy.

How hot is New Jersey’s offshore wind market?

Hot enough to convince a developer to file an application before the state adopted preliminary rules governing the development of offshore wind farms.

On Wednesday, Fisherman’s Energy of New Jersey, LLC filed an application to build the first phase of its proposed offshore wind farm about three miles off Atlantic City. The project envisions a 25-megawatt facility, the first phase of a proposal expected to deploy up to 300 megawatts of wind capacity.

"We are very focused on building the first offshore wind farm in New Jersey," said Daneil Cohen, president of Fishermen’s Energy. "We are still looking to build next year."

As the company was well aware, the filing came the day before the Board of Public Utilities (BPU) approved new rules concerning the development of offshore wind projects. These regulations include an Offshore Wind Renewable Energy Certificate (OREC) program, which will require all projects to demonstrate a positive net economic impact on the state.

Cohen’s optimism may be dimmed by the BPU's assertion that it is unlikely any ORECs will be operating in the next 18 months. In recognition of that, the new rules do not address some of the major issues concerning the offshore wind farms, which have emerged as a priority of the Christie administration.

Those issues revolve around the funding of the ORECs and how ratepayers will absorb the costs of developing offshore wind farms, which will deliver cleaner electricity but at much higher costs than conventional power sources like nuclear, natural gas and coal-fired plants.

Under the rules, any offshore wind project approved by the state must have a positive net economic impact "and thereby improve and protect New Jersey’s economic standing," in the words of BPU President Lee Solomon.

The rules require a cost-benefit analysis that indicates the potential impact upon electricity rates of residential and industrial customers over the life of the project; impact on income, employment and business taxes; and net environmental impact.

The net economic impact benefit is emerging as possibly the biggest hurdle to winning approval from the board. Already, one developer, Garden State Offshore Energy, is considering expanding its proposed project from 350 megawatts to 1,000 megawatts because it believes only a project of that scale will be able to attract enough related manufacturing to justify the net economic benefit.

The state rules come on the heels of the designation by the federal government of a wide swath of New Jersey coastal waters as Wind Energy Areas, a move aimed at streamlining the federal permitting process, which before the designation could have taken between seven and nine years.

Besides Garden State Offshore Energy and Fishermen’s Energy, two other developers have expressed interest in building offshore wind farms off the New Jersey coast. They are NRG Bluewater Wind and OffshoreMW.

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