Explainer: Clearing the Air on Offshore Wind Along the Jersey Coast

The promise of offshore wind has long been deferred in the Garden State, but the technology could still generate jobs and renewable power

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At one time, New Jersey had high hopes of becoming the hub of a nascent offshore wind industry, a sector that would create thousands of high-paying jobs as well as producing cleaner electricity for the state.

Those goals have yet to be realized, and might never be. Even though state lawmakers passed a bill with bipartisan support aimed at promoting the development of 1,100 megawatts of offshore wind by 2020, not much has happened to realize that target.

Why it makes sense: The U.S. Department of Energy projects 20 percent of the nation’s electricity could be produced by wind by 2030, half of which could come from offshore wind farms. The Eastern Seaboard, particularly New Jersey with its relatively shallow coastal waters and high wind speeds, could be a prime location for offshore wind farms, according to industry experts. The Garden State has great offshore wind potential, according to the state’s Energy Master Plan. The technology also enjoys wide support from the public in polls.

Why it is not happening: Blame the state and federal governments, for the most part. The New Jersey Board of Public Utilities has yet to adopt policies that would advance offshore wind projects. And the Bureau of Ocean Management, an arm of the U.S. Department of Interior, has yet to offer leases along the Jersey Shore to nearly a dozen offshore wind developers interested in bidding for them

Why the economics of offshore wind are a big obstacle: In the summer of 2010, the New Jersey Legislature adopted and Gov. Chris Christie signed into law, a bill that would create a financing mechanism to help offshore wind developers line up Wall Street investment. Nearly four years later, the state and offshore wind developers remain at odds as to how implement that mechanism, which relies on ratepayer subsidies to pay for the electricity the wind turbines produce. Unless this is resolved, no offshore wind farms will ever be developed along the Jersey coast.

How the volatile nature of the energy sector is also dampening demand: The steep drop in natural gas prices, spurred by the discovery of rich deposits of the fossil fuel in the Marcellus Shale formations in Pennsylvania and neighboring states, is providing cheaper power here in New Jersey. It makes offshore wind, already more expensive than conventional ways of generating electricity, that much less attractive. This is especially so in New Jersey, a state with some of the highest energy costs in the nation. Offshore wind farm subsidies could cost ratepayers billions of dollars, a major reason why many business groups are leery of the strategy.

What else has not happened: To date, only one application to build an offshore wind farm has been filed with the BPU. It calls for a 25-megawatt pilot project three miles off Atlantic City, but has languished before the agency for years — even though it has won support from the New Jersey Division of Rate Counsel.

*How committed is the Christie administration to offshore wind?” While wind is touted in the new Energy Master Plan adopted by the state, some say the lack of action speaks louder than words. Already two offshore wind developers have either abandoned or scaled back plans to pursue projects in New Jersey. Offshore wind and other renewable energy projects are not liked by conservatives in the Republican party, an issue that could be problematic if Gov. Chris Christie decides to run for president.

Who is working to solve the impasse? Many Democrats, particularly those in South Jersey who view offshore wind as possibly revitalizing a port in Paulsboro, want offshore wind to happen. Assemblyman John Burzichelli (D-Gloucester) has introduced a bill to solve the financing problem by requiring the state’s four electric utilities to fund the projects, allowing them to recover the costs from consumers. The bill (A-4538) has yet to come up in committee.