In a decision that could make New Jersey a leader in wind power, the state is poised to award a deal for the second-largest procurement of new offshore turbine projects yet to be developed anywhere in the U.S.
The New Jersey Board of Public Utilities is scheduled Wednesday to award projects to one or two developers of offshore wind projects that could triple the output of such projects being built off the coast, primarily in waters off Atlantic City and southern Jersey.
Offshore wind is a key — if not most critical — component of the Murphy administration’s goal to transition to 100% clean energy by mid-century. By then, the state hopes that at least 23% of its electricity is generated by offshore wind farms, backed by a robust green economy employing thousands in well-paying jobs.
Only two offshore wind farms, a technology widely used in Europe, are operating in the U.S. — a 30-megawatt facility off Block Island in Rhode Island and a smaller pilot 6-MW project off the Virginia coast.
But rapid growth is occurring in the sector, fueled in part by an announcement by President Biden earlier this year committed to deploying 30 gigawatts of offshore wind by 2030, a proposal that administration officials say could create nearly 80,000 jobs. The Murphy administration wants to develop 7,500 MW of offshore wind capacity by 2035.
Ørsted, one of the world’s largest developers of offshore wind farms, won New Jersey’s first solicitation to build a 1,100-MW project off Atlantic City in 2019. The project is expected to begin commercial operation in late 2024 or early 2025.
Two developers bidding for the rights
The Danish developer also is one of two developers bidding to win the rights to build between 1,200 and 2,400 megawatts of new capacity in the second solicitation. The other is Atlantic Shores Offshore Wind, a joint venture between EDF Renewables North America US LLC and New Shell Energies US LLC.
The state’s solicitation is behind only New York, which announced in January a 2,490-MW solicitation for two projects, one off the Jersey coast and the other off Long Island Sound, both by Equinor.
In New Jersey, offshore wind projects are largely subsidized by electric customers on their utility bills, but the charges do not kick in until the wind turbines begin producing electricity. Concerns over high costs, however, are often raised by the business community.
“Our manufacturers already are paying some of the highest electric rates in the country,’’ said Dennis Hart, executive director of the Chemistry Industry Council of New Jersey. “When are we going to see electricity prices go down? Are we pricing our manufacturers out of business?’’
Clean-energy advocates have strongly backed the offshore wind initiative, saying it will reduce air pollution, including sharply curbing emissions contributing to climate change, but also creating thousands of new jobs.
Sending strong signal
“Wednesday’s announcement will solidify New Jersey as a national leader in offshore wind,’’ said Doug O’Malley, director of Environment New Jersey, noting the solicitation will be the second-largest yet held in the country.
If New Jersey does commit to building another 2,400 MW of offshore wind, the decision sends a signal that the state is committed to growing the industry, according to Kris Ohleth, Executive Director of the Special Initiative for Offshore Wind. That kind of commitment helps build the supply chain to service the sector, she said.
Already, the state secured a commitment from a German firm to build a manufacturing facility for wind turbine foundations in Paulsboro, Gloucester County. The state also is building the first port devoted solely to serving the offshore wind sector, where wind turbines can be assembled for delivery to the offshore wind farms and other manufacturing facilities could be located.
Last week, the Legislature also gave final approval to a bill that aims to simplify the process for wind farm developers to secure connections from their offshore facilities to connect to the state’s land-based grid. The bill prevents local communities from holding up those interconnections.
“New Jersey is demonstrating the kind of leadership with that bill,’’ Ohleth said, noting this is one of the biggest challenges facing the sector where to bring the power lines from the offshore wind farms on shore.
“The goal of the legislation is to prevent one town from stopping a project,’’ O’Malley agreed.