When offshore wind turbines crank out juice, how will that energy get to shore and distributed to rate paying customers? The battle over those electric transmission rights erupted at a public hearing on how to set up New Jersey’s barely-born offshore wind industry. It’s a critical issue.
“It’s kind of like, if you bought a piano and they delivered it to your front lawn. Congratulations, you have a piano, but you need it in your living room where you can play it,” said Markian Melnyk from the Atlantic Wind Connection.
The controversy arose as companies with offshore leases prepared to bid on building New Jersey’s first wind farms. Orsted just launched a data-gathering test buoy to find the best spot 10 miles off Atlantic City. But these firms also warned the Board of Public Utilities they won’t bid unless they can run their own transmission lines to deliver the power they generate. DeepWater Wind explained it doesn’t want its megawatts stranded offshore because another company’s cable failed.
“It’s much safer, much more productive, much better to actually have the developer control the full package of the project — from transmission, to generation, all the way to getting the power to the market,” said Jamil Khan, development manager at DeepWater Wind.
The problem? Other companies that specialize in building transmission lines also want the ability to bid. They’re ineligible by law because they don’t also generate wind power.
“We’re the folks that have built these projects like offshore wind transmission on budget and on time. We should be able to compete,” said Clarke Bruno, president of transmission business with Anbaric. “This prohibition on an entire category of companies from simply bidding just makes no sense.”
Stakeholders testified on the record for the Board of Public Utilities, which is working feverishly to establish guidelines for bidding on New Jersey’s first 1,100 megawatts of offshore power and to determine how much it’ll cost New Jersey ratepayers.
“The solicitation should allow developers to bid up to the full 1,100 megawatts and to supply multiple bids,” said Elisabeth-Anne Treseder, senior regulatory adviser for Orsted. “Ultimately allowing multiple and large-scale bids will allow the BPU the opportunity to determine the optimal project size for the state and for ratepayers.”
It’s a complex process. Advocates urged rules to protect the environment and to shield ratepayers, who will shoulder the burden of paying for offshore wind energy development, which Gov. Phil Murphy ordered should hit 3,500 megawatts by 2030.
“Please consider the customers who will be paying for this and give them time to absorb those costs,” said Rob Gibbs, director of government and regulatory affairs for Direct Energy.
For now, time’s in short supply. Everyone agreed bids must occur before federal investment tax credits expire in 2019.
“This investment tax credit is worth roughly 12 percent of the capital cost of the wind farm, which represents a potential cost savings for New Jersey ratepayers of hundreds of millions of dollars and is scheduled to phase out in 2019,” said Abby Watson, manager of government affairs for Siemens Gamesa.
The Board of Public Utilites will have more public hearings. It’s got more regulatory hoops to jump through. Developers say they hope delays don’t take the wind out of their ‘sales’.