Why is New Jersey making little apparent progress in developing offshore wind farms? The proposal has won widespread support from both Democrats and Republicans? Backing the technology is widely viewed as giving a jump start to a new industry that could create thousands of well-paying “green” jobs in the state. Despite the bipartisan support, however, nothing much has happened. Here are some reasons why it might not happen, despite the best intentions of policymakers.
1. Too expensive
With the steep drop in natural gas prices, offshore wind becomes even less competitive with more conventional ways of producing electricity — although it is cleaner and providers do not have to pay for fuel to power the turbines. That’s no small factor, given that New Jersey businesses and residents pay some of the highest energy costs in the country.
2. State hasn’t devised financing mechanism for offshore wind developers
Three years after a law was enacted to promote the development of offshore wind farms along the Jersey coast, the state Board of Public Utilities has yet to adopt a system to allow the developers to get paid for the electricity produced by their turbines, the cost of which will be borne by ratepayers.
3. Feds haven’t yet offered leases for wind farms off Jersey coast
So far, the Bureau of Ocean Energy Management has offered leases off the coasts of Massachusetts, Rhode Island, and, most recently, Virginia. That could give those states a head start in luring offshore wind manufacturers, a primary goal of the New Jersey legislation. Leases along the Jersey coast may be auctioned later this year, according to the bureau.
4. Federal tax incentives for offshore wind may disappear
With Congress focused on reducing the federal debt, the Obama administration’s efforts to promote cleaner ways of producing electricity, such as from offshore wind, could be stymied by Republicans in the House of Representatives, who have generally criticized subsidies for renewable energy.
5. Offshore wind developers have cut back on technology investment
One developer long involved in the effort to build an offshore wind farm along the Jersey coast, NRG Bluewater Wind, scrapped its plans about two years ago. Another, Garden State Offshore Wind, has greatly scaled back the number of people devoted to the project.
6. Gov. Chris Christie’s national ambitions
While the administration repeatedly has said it is committed to developing 1,100 megawatts of offshore wind by 2020, its actions say otherwise (both for reasons stated above and below), according to clean energy advocates. Many conservatives criticize offshore wind as too expensive, and strong promotion of the technology could hurt the governor in Republican primaries.
7. Fishermen’s Energy LLC
The only offshore wind project currently before the BPU keeps being put on the backburner by state regulators—when they are not complaining about its cost to ratepayers. The pilot project, three miles off Atlantic City, was supposed to begin public hearings on the proposal this month, but once again was postponed. While the New Jersey Division of Ratepayer Advocate has reversed its opposition to the project, the BPU still has questions about its costs to ratepayers.
8. The $100 million tax credit
The offshore wind law approved three years ago is designed to give enough incentive to offshore wind manufacturers to locate in New Jersey to help build a robust green economy in the state. So far, not one has committed to come, given all the unanswered questions about the state’s efforts to promote offshore wind.
9. Not much support from business community and others
Offshore wind does have its proponents in the business community — such as marine interests and companies looking to provide ancillary services. But many of the big lobbying interests in Trenton hate the idea, saying it would only increase energy bills for their customers by imposing new fees on utility bills. The effort also has lukewarm support at best from coastal conservation groups, who fear it will lead to an industrialization of the ocean.
10. Other technologies may crowd out offshore wind
The administration is actively pushing other ways of generating electricity, including combined heat and power (CHP), which produces power more efficiently and with less pollution than conventional generating stations. They could end up grabbing ratepayer subsidies once geared to offshore wind.