Offshore Wind Could Be Moving Closer to Reality

Tentative timeframe proposed by wind developers could see projects OK'd by end of 2012

If offshore wind developers get their way, state officials will decide what projects will move forward along the coast of New Jersey sometime around December 2012.

At least that is the tentative timeframe suggested by developers working with the state Board of Public Utilities (BPU) on how the projects will be funded and how the wind farms will be awarded offshore renewable energy certificates (ORECs) for the electricity they generate.

The Christie administration is aggressively pushing offshore wind projects, hoping they will spur the creation of thousands of green manufacturing jobs to supply wind turbines, cables and countless other parts.

The proposal emerged from a series of stakeholder hearings held in Trenton this past month on how the wind farms will earn ORECs for the power they produce and how power suppliers will pay for the certificates.

In putting together a proposed rule on how the process would work, the developers, primarily four companies that have been trying to win approval for their projects the longest, also suggested a timeframe for the state agency to decide what projects are awarded the certificates. Without certificates, none of the projects are likely to line up the necessary financing to get the wind farms built.

Under the developers’ proposed timeframe, the state would open up the application process in March 2012 and make a decision what projects are awarded certificates by the end of that year.

An Aggressive Schedule

“It’s an aggressive schedule, but we think it is realistic,” said Erich Stephens, vice president of Offshore WindMW, one of the projects that hopes to build up to 1,000 megawatts of offshore wind capacity about 16 miles off the coast of south Jersey.

Still, it would be years before wind turbines appeared off the coast, given that developers will have to navigate permitting and leasing approvals, too.

“When all is said and done, something like 2016 or 2017 is a good guess,” Stephens predicted.

That prospect, however, worries some clean energy advocates. “We’re holding up the market and running out of time,” said Jeff Tittel, director of the New Jersey chapter of the Sierra Club.

Eleven developers have expressed interest to the federal government in leasing tracts off the coast of New Jersey, which is hoping to develop 1,100 megawatts of capacity under the current process, although the state’s draft Energy Master Plan envisions up to 3,000 megawatts of offshore wind.

Prime Territory

New Jersey is considered a prime location for offshore wind because of the relatively shallow waters along its coast and because of its program to award certificates to developers of wind farms. It also has enacted a law that would offer up to $100 million in tax credits to manufacturing segments that locate in the state.

Under the Offshore Wind Economic Development Act the developers propose the price they will receive for the power the wind turbines produce. It will be up to the state agency to determine whether the cost is justified when weighed against other factors, such as generating cleaner power, jobs an offshore wind industry could generate and increasing reliability of the regional power grid. The price would remain unchanged for 20 years.

According to the developers’ proposal, the agency also would establish an offshore wind carve-out, laying out a schedule of how many credits power suppliers would have to buy from the offshore wind farms, similar to a scheme that has helped the solar energy sector flourish in New Jersey.

If the state buys into the developers’ timeframe, it would not establish a clearinghouse to manage the stream of revenue from suppliers who are obligated to buy the certificates until December 2013. The clearinghouse also would oversee the payments from the regional power grid for the electricity and capacity provided by the wind farms, payments that are supposed to go back to ratepayers.