Offshore Wind Advocates Want Feds to Delay Leasing Tracts Off Jersey Coast

Tom Johnson | January 27, 2014 | Energy & Environment
Letter warns governor, legislators that untimely leases could hurt NJ's offshore wind industry

offshore wind
The state is at risk of losing the benefits of a robust offshore wind industry, executives in the sector warned Gov. Chris Christie and legislative leaders, according to a letter they delivered to the governor on Friday.

In the two-page letter, the renewable-energy advocates urged the governor and lawmakers to lobby the federal government to delay leasing offshore wind tracts along the Jersey coast, an action expected to occur sometime this year.

The stance — by two of the offshore developers among the most active in trying to build projects in New Jersey and other firms that hope to supply the industry — is striking because the developers until now have been pressing the federal government to speed up its process for allowing offshore wind farms to get under way.

But they also have been waiting even longer for New Jersey to get its own act together. Three-and-a-half years after a bipartisan bill was enacted to promote the development of wind farms off the coast, the state agency overseeing the effort has failed to adopt a financing mechanism the developers need to line up funding from Wall Street for their projects.

Without such a mechanism, it is unlikely any offshore wind farms will be built off the Jersey Shore. The 2010 legislation envisioned the New Jersey Board of Public Utilities awarding so-called Offshore Renewable Energy Credits (ORECs) at a price yet to be determined for the electricity the turbines produce. In the end, the cost of those credits will fall on utility customers.

Beyond urging the federal government to delay its lease auction, the letter urges the administration and Legislature to force the BPU adopt the necessary regulations to move the process forward and select the developers who will receive ORECs.

Unless that happens and federal lease process moves forward, the letter warns that New Jersey will have no say as to which developers receive leases for offshore wind farms off its coast.

“Without action, the opportunity for New Jersey to ensure that developers working off New Jersey’s coast will bring economic benefits to the state could be lost forever,’’ according to the letter.

“Or worse, New Jersey could lose the opportunity of offshore wind entirely, should the winners of the Bureau of Ocean Management (an agency located within the U.S. Department of Interior) auction be unable to construct their projects, as could be the case if the winning bidders are found to be ineligible under the Offshore Wind Economic Development Act.’’

Among the signees to the letter were the chief executive officers of Deepwater Wind and Offshore MW. Deepwater Wind is a partner in the Garden State Offshore Energy project with PSEG Global, a subsidiary of Public Service Enterprise Group. Offshore MW is a sister company of WindMW, a German-based company building an offshore wind farm in the North Sea.

Assemblyman John Burzichelli (D-Gloucester), a big proponent of offshore wind, said he opposes asking the federal agency to delay the lease auction off the state’s coast.

“Where’s all the promise of renewable energy?’’ he asked, saying it might help if the auction does occur by attracting serious developers to New Jersey. “We’re caught in a catch-22 situation. Which comes first?’’

Jeff Tittel, director of the New Jersey Sierra Club, questioned whether the state will ever move forward on offshore wind projects. “If we wait for the BPU to get its act together, then we may never see a wind farm.” he said.

He agreed with Burzichelli that the state should not delay the lease auction, if it happens this year. “If there is some competition, we may see other developers come forward,” Tittel said.

When the federal agency first proposed to open up offshore tracts for leasing, there were more than a dozen offshore wind developers that expressed an interest in bidding for leases for wind farms off the Jersey Coast.

In mid-December, Burzichelli introduced a bill (A-4538) to try and jumpstart the offshore wind projects. His bill, which was not acted on in the lame-duck session, would have the wind farms financed by the state’s four electric utilities, which would recover the money from consumers — and then some. It has been reintroduced in the new term, but has yet to come up in committee.

While many environmental groups and clean energy advocates strongly back offshore wind, much of the business community is wary that the technology will drive up what they view are already steep electric bills in New Jersey.