NJ approves offshore wind funding mechanism, rejects demonstration project

On December 18, the New Jersey Board of Public Utilities took two actions affecting offshore wind: approving the state’s Offshore Wind Renewable Energy Certificate (OREC) funding mechanism, but rejecting a petition by Nautilus Offshore Wind, LLC to install a 25 MW offshore wind demonstration project in state waters off the coast of Atlantic City. Meanwhile, developers have formed a new joint venture to develop offshore wind in federal waters farther offshore New Jersey.

New Jersey Governor Phil Murphy has set a goal of 3.5 gigawatts of offshore wind capacity by 2030, and in May 2018 he signed into law a renewable energy bill codifying that goal into statute. On September 17, 2018, the NJBPU opened the nation’s largest single-state solicitation to date, seeking 1,100 megawatts of offshore wind. Applications will be accepted through December 28, 2018. Winning projects will be compensated through the OREC mechanism approved this week, which requires electric companies to buy defined quantities of ORECs from offshore wind developers, much like a traditional renewable portfolio standard mechanism.

Also on December 18, the BPU rejected a 25 megawatt demonstration project proposed by Nautilus (under development by EDF Renewables and Fishermen’s Energy). The Nautilus project would feature three turbines in state waters about 2.8 miles offshore Atlantic City. But the BPU found the Nautilus project did not demonstrate the economic and environmental benefits required under the Offshore Wind Economic Development Act for the state to commit ratepayer funds. In particular, the BPU found that Nautilus didn’t provide sufficient information to substantiate claimed economic benefits, and further that Nautilus demanded a price that was too high given the unsubstantiated benefits.

But offshore wind development may soon occur farther offshore New Jersey. On December 19, 2018, EDF Renewables North America and Shell New Energies US LLC announced the formation of a 50/50 joint venture, Atlantic Shores Offshore Wind, LLC to co-develop offshore wind generation in federal waters offshore New Jersey. The site is about 8 miles offshore Atlantic City. At issue is the 183,353-acrea OCS-0499 lease area, the rights to which were initially auctioned by the federal Bureau of Ocean Energy Management in 2015. That auction was won by Toto Holding Group subsidiary US Wind Inc., with a winning bid of $1,006,240.

More recent federal auctions for offshore wind site leasing rights have brought much higher winning bids -- for example, a December 2018 auction for sites offshore Massachusetts brought in about $135 million for each of three lease areas, totaling over $405 million in winning bids for about 390,000 acres.

NJ board to decide on offshore wind project

Will New Jersey regulators approve key support for an offshore wind project proposed off the Jersey shore?

Many coastal states and nations are placing new focus on energy projects designed to generate electricity from offshore winds.  A project off New Jersey, first proposed in 2011, appeared to make some initial progress, but has since seemed to stall -- due in part to regulatory delays at the state level.  With a decision by the state Board of Public Utilities (BPU) expected this week, will the Fishermen's Energy offshore wind project move forward?

Fishing boats in a small harbor along Maine's midcoast.

The New Jersey coast offers a fairly unique combination of wind resources and proximity to customer demand.  To capitalize on this combination, the New Jersey legislature and government adopted measures promoting the development of the state's offshore wind resource.  For example, New Jersey's Energy Master Plan calls for an ambitious target of 1,100 megawatts of offshore wind installed by 2020.

In response to the opportunity, in May 2011,  Fisherman's Energy submitted an application to the BPU under the Offshore Wind Economic Development Act for an offshore wind demonstration project.  The Cape May, New Jersey-based developer proposed five, five-megawatt wind turbines in state waters about 2.8 miles off the Atlantic City coast, with a total capacity of 25 megawatts and an estimated cost of $200 million to $300 million.  By the end of 2012, the project had won substantially all of the permits necessary for its development and operation, including approvals by the New Jersey Department of Environmental Protection and Army Corps of Engineers -- but a key piece of the regulatory and financing puzzles remains missing.

Under New Jersey law, the BPU may select one or more qualified offshore wind  projects for financial support in the form of a long-term contract to buy Offshore Wind Renewable Energy Certificates, or ORECs, from the developer.  This revenue stream is viewed as essential to enable a developer to finance and construct a project.

But nearly 3 years later, the state OREC review process remains ongoing. Last year, BPU Staff recommended the BPU reject Fishermen’s project on the grounds that it demonstrated no economic benefits but bore unnecessary technology risk due to its selection of XEMC turbines.  But project advocates, including the New Jersey Rate Counsel, support the project for its apparent consumer benefits.  Nevertheless, the BPU has yet to approve an OREC program.

Meanwhile, crucial federal tax incentives such as the renewable energy business investment tax credit have ended.  Many renewable project developers have found these credits essential in building financing packages for their projects over the last years; while the credits may be reenacted in some form, their loss may mean Fishermen's Energy needs to revise its financial projections.

Fishermen's Energy -- and the many other stakeholders following the project -- may soon learn the project's fate.  The New Jersey BPU is scheduled to vote today on whether to approve the project and authorize it to produce and sell ORECs.  Will the BPU grant Fishermen's Energy's request?

Electricity and Super Bowl XLVIII: Will the lights stay on?

Fans will soon pack MetLife Stadium for Super Bowl XLVII.  The National Football League's 2013-2014 season championship game will be held on February 2 at 6:30 PM (Eastern). Following the power outage during last year's Super Bowl, organizers of this year's event are taking extra precautions to avoid disruptions to the East Rutherford, New Jersey stadium's electricity supply.  At the same time, organizers are promoting the environmental aspects of the power supply for this year's game.

During Super Bowl XLVII at the Mercedes-Benz Superdome in New Orleans, Louisiana, a power outage moments after the beginning of the second half of play caused many of the stadium lights and systems to go dark.  Between restoring power supply, rebooting computer systems, and letting stadium lighting cool and return to full power, it took 34 minutes for play to resume.  Subsequent investigation revealed that the outage occurred when load-monitoring equipment had opened a breaker after detecting an abnormality in the system.

Organizers hope this year's championship is free from such disruption.  MetLife Stadium and the rest of the Meadowlands Sports Complex is served by utility Public Service Electric & Gas Co. or PSE&G.  Two power lines feed into the substation serving the complex, and on-site generators add additional capacity.  PSE&G has been reported as expecting the game to draw as much as 20 megawatts of power, and the utility, NFL, and stadium owner have collaborated on measures and testing to ensure continuity of service during the big game.

Meanwhile, PSE&G's parent PSEG has partnered with the NFL Environmental Program to source renewable energy for the game.  PSEG has agreed to purchase and retire a renewable energy credit, or REC, for every megawatt-hour of electricity used at the stadium, the AFC and NFC team hotels, and Super Bowl in Times Square.  240 solar RECs are slated to come from PSE&G's nearby 3-megawatt Kearny solar farm, as well as 5,700 additional RECs from the 7.5-megawatt Jersey Atlantic Wind Farm near Atlantic City.

Beyond electricity, event organizers have committed that all the waste oil generated from food production during the game will be processed into biodiesel fuel by Tri-State Biodiesel, and that all other food waste will be composted.

Presumably, most fans' attention will be focused on the game.  Will the organizers' measures prevent power outages in an environmentally friendly manner?

March 7, 2011 - long-term pricing for offshore wind in New Jersey

New Jersey is pursuing offshore wind in earnest.   The Board of Public Utilities will be holding a public open question and answer session in Trenton on March 25, 2011, to discuss the recently adopted Offshore Wind Rules (N.J.A.C. 14:8-6).  This comes just over a month after an affiliate of Fishermen’s Energy of New Jersey filed a petition to the New Jersey Board of Public Utilities seeking approval for offshore renewable energy certificates (ORECs) for a wind project to be developed offshore of Atlantic City.

The project, to be developed pursuant to the New Jersey Offshore Wind Economic Development Act, would be a six-turbine demonstration-scale project about 2.8 miles east of Atlantic City, generating up to 25 megawatts of energy.  Governor Christie signed the Offshore Wind Economic Development Act in 2010, authorizing the development of up to 1,100 megawatts in offshore wind capacity off New Jersey.  To help fund such projects, the Act also gives the New Jersey Board of Public Utilities the authority to set a long-term price for ORECs, guaranteeing up to 20 years of price certainty for developers.  In recognition of the economic value of siting offshore-wind associated manufacturing capacity in the state, the Act also provides $100 million in tax credits for the creation of such jobs.

Fishermen's project is in the race to be the first grid-connected offshore wind facility in the country.  Will they cross the finish line first?