The state’s efforts to develop offshore wind farms at the Jersey Shore could take a huge step forward this week with the introduction of an eagerly awaited bill to provide a framework for financing the projects.
The legislation, the subject of lengthy behind-the-scene discussions among the Governor’s office, key lawmakers and three offshore wind developers, is viewed as critical to the state’s efforts to build up to 1,100 megawatts of offshore wind farms, between three and 20 miles from the coast.
The key provision in the bill would set up a process for establishing offshore renewable energy certificates (ORECs), which would be given to owners of the wind farms for each megawatt of electricity the turbines generate. The certificates are similar to solar renewable energy certificates (SRECs), which have helped propel New Jersey’s fast-growing solar sector.
The move to consider offshore wind legislation was welcomed by backers of clean energy. “It shows a real commitment by the state,’’ said Matt Elliott, clean energy advocate of Environment New Jersey. "In the past there have been goals, but no assurances that the state would require utilities to buy the offshore energy certificates."
Despite a widespread consensus behind a policy of encouraging offshore wind development, however, many details remain to be worked out before residents see wind turbines off the coast. Currently, there are three different versions of an offshore wind bill: a draft by the developers; a draft by the Governor’s office; and one expected to be introduced Thursday by Senate President Stephen Sweeney (D-Gloucester).
Differences abound. The Governor’s office believes the developer’s bill puts too much of the cost and the financial risk on ratepayers. The administration’s version tries to limit financial risk to ratepayers by requiring the developer to pick up any cost overruns and justify its project with a cost-benefit analysis. It also affords no special status to three projects backed by the Corzine administration, which means they could face competition from other wind developers. Sweeney's bill is expected to forge a middle ground between the administration's bill and what has been recommended by developers.
Even though those issues remain to be hammered out, the bill is expected to be taken up by the Senate Environment and Energy Committee a week from Thusday and some of the developers hope it can win final approval before lawmakers break for summer recess.
The timing is important because New Jersey is not alone in promoting offshore wind development. Cape Wind, a 454-megawatt offshore wind farm in Nantucket Sound, won approval from the federal government earlier this year and projects in Delaware and Rhode Island are farther along than three projects awarded planning grants off the Jersey coast.
The Christie administration has repeatedly said it hopes to attract a wind turbine manufacturer to the state as part of its efforts to develop offshore wind, a prospect more likely to be achieved if New Jersey is viewed as being in the forefront of promoting the technology. Department of Environmental Protection Commissioner Bob Martin, who is leading the offshore wind process, declined to comment for this story.
But Peter Mandelstam, president of NRG Bluewater Wind, which wants to build a 350-megawatt farm 16.5 miles southeast of Atlantic City, said jobs will be created in the wake of any wind project, even if they do not include manufacturing. "The supply chain will follow the project to any of the states along the eastern seaboard," he said, referring to ports from where the wind equipment would be shipped, assembled and maintained.
The other two developers who have received interim licenses are the Garden State Offshore Energy, a collaboration between Deepwater Wind and PSEG Renewable Generation, which wants to build 345 megawatts at least 16 miles off the coast and Fishermen’s Energy of New Jersey, which wants to build wind turbines from three miles to six to seven miles off the coast.
Beyond the technological issues, the projects are likely to be closely scrutinized because of their big price tags. Garden State projects the cost of its project at $1.5 billion, according to Scott Jennings, president of PSEG Global. Fishermen’s Energy is in the same range, NRG Bluewater Wind says it is too early to estimate the cost of its project.
Ev Liebman, director of advocacy for New Jersey Citizen Action, said the impact to consumers ought to be an important consideration before these projects move forward. "It’s really important that the cost not solely be shouldered by ratepayers," she said.
To foster jobs, at least one of the bills would create wind energy zones in the South Jersey Port Authority District where the Economic Development Authority would provide up to $100 million in tax credits for qualified wind energy facilities. The money would come from money raised by a regional initiative which New Jersey joined to combat global climate change.
The bills do not spell out how much the offshore energy certificates will run, leaving the price to be set by the developer in a process reviewed by the state Board of Public Utilities. It is expected the price will be fixed over a 20-year-period with adjustments made to reflect inflation. The ORECs will be purchased by the state’s electric utilities to help meet the state’s renewable energy portfolio standards. By 2020, the state energy master plan is calling for 3,000 megawatts of electricity to be generated by wind farms, a goal some believe is unrealistic.
Mandelstam disagrees. "Do I think New Jersey can do 3,000 megawatts? That’s easy," he said, noting in 1998, the United States had installed only 17 megawatts of wind capacity. By 2009, the wind capacity exceeded 10,000 megawatts. One megawatt is capable of powering about 800 homes.
Besides agreeing on a financing mechanism, the other major hurdle facing the wind developers is a projected seven-year time frame to weave through the federal permitting process, a span all the developers call unacceptable. U.S. Interior Department Secretary Ken Salazar told governors of the eastern seaboard states earlier this spring that time frame will be shortened, but by how much is uncertain.
Mandelstam said the best route for shortening the time frame may be by shifting responsibility away from the Minerals Management Service, which now oversees such projects, to some other federal agency. NRG Bluewater Wind would like to see the time frame shortened to a two-year review process, he said.