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Is New Jersey Missing Its Offshore-Wind Opportunity?

Tom Johnson | January 29, 2013

Legislative committee wants to know why offshore wind is dead in the water.

To some, the state’s efforts to develop offshore wind farms is a win-win proposition. It is a way of producing cleaner electricity, a means of spurring a green economy, and a step in reducing New Jersey’s greenhouse gas emissions.

But 30 months after a bill to promote offshore wind farms was enacted, a legislative committee yesterday focused on why that has yet to happen. But the agency most responsible for pushing offshore wind ahead failed to show up to answer questions about what is slowing down the process.

In the absence of the New Jersey Board of Public Utilities, offshore wind proponents told the Senate Oversight Committee that the state risks losing the opportunity to become the hub for the sector on the Eastern Seaboard, a goal often asserted by both the Christie administration and the Democratic-controlled Legislature.

“It offers a tremendous economic development opportunity for our state that could easily slip from its grasp,’’ said Sen. Bob Gordon (D-Bergen), the chairman of the panel, which convened the session

In its Energy Master Plan, the state hopes to develop 1,100 megawatts of offshore wind capacity along its coast, a goal becoming increasingly more elusive as delays at the state and federal permitting levels continue to occur.

Most of the blame for the failure to move forward with offshore wind farms, none of which have been built in the United States, focused on the BPU’s inability to adopt rules governing how offshore wind developers earn revenue from the electricity their turbines produce.

That has been the biggest holdup in moving offshore wind farms forward. Last month, the agency received a proposal from a consultant to set up a new entity that would prevent the Legislature and Christie administration from diverting revenue from electricity produced by wind farms to plug holes in the state budget.

The proposal is scheduled to be the focus of a stakeholders meeting held by the BPU next month, but was rarely the focus of attention during the hearing in the Statehouse Annex.

In response to a question, the BPU defended its actions. “With the innovation of an OREC (offshore renewable energy credit) funding mechanism, we’re well ahead of the federal government’s efforts to finalize a process to award offshore wind (OSW) leases, the board’s staff is making sure we get it right and that the resulting mechanism is one that works for all concerned parties,’’ the agency said in a press statement.

While environmentalists and lawmakers have strongly pushed efforts to develop offshore wind, the strategy has been questioned by business interests, who wonder why the state is moving forward with a technology that will likely increase energy costs in a state saddled with some of the highest energy bills in the nation. The wind farms will be subsidized by electric ratepayers, according the to the offshore wind law.

Advocates of the technology urged the state to move more quickly in promoting offshore wind development, noting that New Jersey is facing increasing competition from other states along the Eastern Seaboard.

Chris Hart, a former official in the U.S. Department of Energy, said New Jersey enjoys many advantages that could result in it being a leader in this energy sector -- its proximity to a large electricity load on shore, relatively shallow and level sea bed, and thriving ports.

“These factors position the state squarely to win the race for the jobs that will come from this industry,’’ Hart said. Noting the competition from other states, however, Hart added: “The time to act is now.’’

Hart noted that the federal energy agency has designated seven projects to receive initial funding to spur their development, including a pilot nearly three miles off Atlantic City proposed by the Fishermen’s Energy group. If the project begins construction before the end of 2013, it could win another $47 million in federal funding, an award that would make it more financially feasible.

So far, the project has faced tough scrutiny from state regulators. Consultants for both the BPU and the state Division of Rate Counsel say the proposed ratepayer subsidies for the pilot project in Atlantic City do not justify the benefits the project would bring.

At one point, however, Gordon suggested that the state may need to revise legislation to incorporate more environmental benefits into new technologies, such as wind.

Paul Gallagher, chief operating officer for the Atlantic City Wind Farm project, disputed the consultants' opinions. “New Jersey has quite an opportunity for economic development if this project is built and built first,’’ he said. “I really think it’s time to build the Atlantic City Wind Farm.’’

Jeff Tittel, director of the New Jersey Sierra Club, agreed. “We’re running out of time,’’ he said, urging legislators to step in and to try and accelerate the process.

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