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Reported by New Jersey Board of Public Utilities (NJBPU) on 19 December 2018

New Jersey Board of Public Utilities Takes Crucial Steps Toward 3,500 MW Offshore Wind Goals

Board Approves OREC Funding Mechanism; Rejects Demonstration Project

(Courtesy of pixabay.com)

The New Jersey Board of Public Utilities (NJBPU) today unanimously voted to adopt a proposed rule establishing the funding mechanism for the state’s offshore wind program, a key component of Governor Murphy’s clean energy agenda. The funding mechanism, known as the Offshore Wind Renewable Energy Certificate (OREC), establishes the process by which all offshore wind projects will be funded and how revenues will flow back to ratepayers. Under Governor Phil Murphy’s leadership, the NJBPU has taken this next step to make New Jersey the center of the nation’s offshore wind industry. On September 17, 2018, the NJBPU opened the nation’s largest single-state solicitation to date for 1,100 megawatts (MW) of offshore wind. Applications will be accepted through December 28, 2018.

“Today’s actions demonstrate my Administration’s focus on developing a robust offshore wind market and achieving 3,500 MW of offshore wind and 100 percent clean energy by 2050,” said Governor Murphy. “The offshore wind program is a key component of the state’s strategic economic growth plan and a critical strategy to mitigate the impacts of climate change.”

“We are more committed than ever to fulfilling Governor Murphy’s bold vision of a robust offshore wind program and clean energy future and we look forward to receiving applications for our 1,100 MW solicitation before the end of the year,” said NJBPU President Joseph L. Fiordaliso. “With today’s approval of an offshore wind funding mechanism, we anticipate significant benefits for the state at the best possible cost.”

Later this week, the Board will also consider selecting an economic consultant to assist in the evaluation of the applications for the 1,100 MW solicitation. If approved, the Board will send the award recommendation to the New Jersey Department of the Treasury. Upon review and approval, the winning bidder and contract will be announced publicly.

The Board also denied the petition of Nautilus Offshore Wind, LLC to install a 25 MW offshore wind demonstration project in state waters off the coast of Atlantic City. This is the second time in a decade the Board has unanimously denied an iteration of this project. This pilot project, originally proposed in 2009, does not demonstrate the economic and environmental benefits required under the Offshore Wind Economic Development Act (OWEDA) for the state to commit ratepayer funds.

“Unfortunately, the Nautilus demonstration project did not meet the net economic benefits standard as required by OWEDA, and the Board voted down the application,” said President Fiordaliso. “We look forward to reviewing the applications for 1,100 MW of offshore wind and anticipate greater net benefits with larger-scale projects. The award will cement New Jersey’s place as the national epicenter of the offshore wind industry.”

In denying the Nautilus application today, the Board noted several reasons:

  • As required by OWEDA, an offshore wind project must demonstrate “positive economic and environmental net benefits to the State.” Despite multiple requests during the proceeding, Nautilus did not provide the necessary information so that Board Staff could properly validate the information. Additionally, Nautilus failed to provide the assumptions and inputs used in their economic multiplier modeling, making it impossible for the Board to confirm whether the application satisfied OWEDA.
  • The price quoted by Nautilus was too high given the unsubstantiated benefits, and therefore an unacceptable burden for the state’s ratepayers. This includes the proposed OREC starting price plus the annual escalator. Board staff made this clear to Nautilus at multiple points during negotiations over the last three months, but the price never came down to an acceptable level.

On January 31, 2018, Governor Murphy signed Executive Order No. 8, directing the NJBPU to fully implement OWEDA and begin the process of moving the state toward its 2030 goal of 3,500 MW of offshore wind energy generation after an eight-year delay.

On February 28, 2018, the Board adopted an Order directing Staff to take actions to implement Executive Order No. 8, including preparing for the solicitation of 1,100 MW of offshore wind, as well as initiate a rulemaking proceeding for the OREC funding mechanism. Governor Murphy has also asked the Board to consider two additional solicitations of 1,200 MWs in 2020 and 2022. The Governor has set forth an ultimate goal of 3,500 MW of offshore wind by 2030 and 100 percent clean energy by 2050.

The Board fulfilled the Governor’s directive by opening the 1,100 MW solicitation and by today approving the offshore wind funding mechanism.

References

[1]

New Jersey Board of Public Utilities (NJBPU). Press release - New Jersey Board of Public Utilities Takes Crucial Steps Toward 3,500 MW Offshore Wind Goals. URL: https://nj.gov/bpu/newsroom/2018/20181218.html. [Date Accessed: 19/12/2018].

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