Fishermen's Energy's proposed offshore wind project off the New Jersey coast has essentially all its permits in place to start construction -- but the project's future is in doubt over a question of financial support from electricity ratepayers.
Fishermen's Energy has proposed building a 25-megawatt wind project about 2.8 miles off the coast of Atlantic City. The $200 million project would be connected to the mainland electricity grid, enabling the power it produces to be sold to New Jersey electric customers. The project has already received key permits, such as approval by the Army Corps of Engineers to begin construction.
Building what could be the nation's first commercial offshore wind project will be expensive. While future offshore wind projects could be cost-competitive against more traditional electric generation resources, the New Jersey pilot project's finances rely on a portfolio of federal and state financial incentives. These include federal tax credits, a grant from the U.S. Department of Energy, and a state commitment that utility ratepayers will shoulder above-market costs.
A 2010 New Jersey law established an offshore wind renewable energy certificate program known as OREC that was designed to provide that ratepayer commitment. For over a year,
Fishermen's Energy has been waiting for the New Jersey Board of Public
Utilities to decide whether to require mainland utilities to purchase
the project’s renewable energy
output. But that case remains pending, with no clear state-law timeline for its resolution. Issues in play include the project's cost to ratepayers, particularly if the project fails to win further competitive grants from the federal Department of Energy.
In the meantime, Fishermen’s Energy needs to spend at
least $10 million on the project this year to remain eligible for the federal investment tax credit. Yet the developer is presumably reluctant to commit those funds before learning whether it will also win ratepayer support. As December 31 draws nearer, this dilemma makes it more challenging for Fishermen's Energy to sustain project development efforts.