The state should once again reject a pilot offshore wind project about three miles from Atlantic City, according to a consultant for the New Jersey Division of Rate Counsel.
In testimony submitted to the state Board of Public Utilities, the consultant argued the 25-megawatt Nautilus Offshore Wind LLC project is too expensive for ratepayers and fails to provide a net economic benefit to New Jersey.
The conclusion is significant because the Rate Counsel had backed a previous iteration of the project, which was previouslyby the BPU.
The project, by EDF Renewable Energy, is now back before the regulatory agency after the Legislature pushed a bill requiring the BPU to review it anew. Gov. Phil Murphy signed the legislation without comment.
Offshore-wind development is one of the governor’s top priorities. Since he took office, his administration has pushed through goals to develop 3,500 MW of offshore wind by 2030, the most aggressive target in the nation.
The BPU recently opened a window seeking proposals from offshore-wind developers to build up to 1,100 MW, a process likely to attract as many as four companies seeking to build grid-scale projects 10 miles or more off the Jersey coast.
None of those projects would likely be built sooner than the Nautilus project, which its advocates say would serve as a demonstration project for future, more expansive offshore-wind farms.
“The Nautilus project offers an opportunity to develop the infrastructure and skilled workforce needed to establish New Jersey as the forefront of the offshore wind industry,’’ said Doug Copeland, regional project development manager for EDF.
Copeland described the heavily-redacted brief from the consultant, David Dismukes, as a starting point for continued negotiations on how best to move forward on the project.
“The Ratepayer’s Advocate has supported the Nautilus project in the past, and we are confident that they will ultimately support the project by the end of this process as well,’’ Copeland said.
But Dismukes argued the state should not approve the project nor revenues from utility customers from a new subsidy they will pay to promote offshore wind.
“The Nautilus project is clearly expensive relative to any traditional fossil fuel-fired resource, but also exceptionally expensive relative to a wide range of commercially available renewable energy resources,’’ Dismukes said.
Just how expensive he did not detail. In his written brief, much of the specifics about the project — what it would cost, the status of federal tax incentives it could garner, and ratepayers’ subsidy — was redacted.
“The project is simply too expensive and will lead to more costs than benefits for New Jersey ratepayers despite the fact that these cost burdens, according to the company, may amount to only a few dollars per year,’’ Dismukes said.
He also noted that, except for the nation’s first offshore-wind farm off the coast of Rhode Island, most offshore-wind development in the U.S. “is moving forward quickly with expansive programs that effectively skip any form of ‘experimental’ or ‘pilot’ process.’’
Murphy’s executive order setting a 3,500-MW target for offshore wind, Dismukes noted, would require the state to build about 300 MW annually — a level that cannot be reached efficiently on an individual project base.
That argument resonated with some. “There are big projects coming,’’ said Jeff Tittel, director of the New Jersey Sierra Club, a proponent of offshore wind. “That’s where we need to concentrate.’’
Some offshore-wind advocates fear the Nautilus project, because it is so small, will not achieve the economies of scale that larger grid-scale proposals have that drive down the ultimate cost to utility customers.
Dismukes apparently shares those concerns. “The board should once again reject the company’s project since it comes at a cost too high for New Jersey’s ratepayers,’’ he said.