New Jersey jumped into the race to build the nation's first offshore wind farm yesterday by enacting a law that provides a financing structure for turbines off the state's coast.
For supporters, the goal is to duplicate a state program that lifted New Jersey near the top of U.S. rankings for solar installations. Yet opponents say that offshore wind is too costly for the state, and there are lingering uncertainties about whether New Jersey -- along with the rest of the country -- will ever see spinning turbines in its waters.
At yesterday's bill-signing ceremony at a former oil terminal, Republican Gov. Chris Christie touted the bill as a job creator that would ease the state's economic doldrums.
"Developing New Jersey's renewable energy resources and industry is critical to our state's manufacturing and technology future," Christie said, standing with state officials and bipartisan supporters of the bill from the state Legislature.
The bill, known as the "Offshore Wind Economic Development Act," requires the state to obtain a yet-to-be-determined percentage of its power from offshore wind. It does so by directing the New Jersey Board of Public Utilities to set up a program requiring utilities to buy offshore renewable energy credits for approved wind farms.
The aim with the credit program is to provide a steady revenue stream for skittish wind developers. The catch is that the board also has to first approve the wind farms and their associated costs before any construction occurs, and there is no guarantee that the board will do so.
The law mirrors a state program providing solar credits that helped shoot New Jersey to second place last year in terms of U.S. photovoltaic panel installations. It is a different financial model than the power purchasing agreements envisioned for many other offshore projects.
An effort to keep energy money and grow jobs in state
The offshore wind credits would support at least 1,110 megawatts of power, which is the size of a large nuclear power plant. That turbine capacity could power 1 million homes, supporters say.
The bill also authorizes the New Jersey Economic Development Authority to provide up to $100 million in tax credits to attract turbine manufacturers and companies in the offshore wind supply chain to New Jersey.
For bill backers, the legislation is a critical steppingstone for the offshore wind industry and a necessary tool for New Jersey to meet its renewable electricity standard.
"This is going to push the bar higher and get other states to go after multiple offshore wind farms," said Jim Lanard, the head of the Offshore Wind Development Coalition.
Under existing statutes, New Jersey must obtain 22.5 percent of electricity from renewables by 2021. Without offshore wind, Lanard said, the state would have to purchase renewable power from outside state borders to meet the requirements.
Even so, some critics of the law predicted offshore wind would never appear in the waters near New Jersey, considering the potential costs of proposed projects. Some predicted opposition similar to the anti-offshore wind groups that popped up when the Cape Wind project moving forward in Massachusetts got closer to obtaining a federal permit.
"This is just going to increase rates for people who already are paying high rates," said Jonathan Lesser, an economist who testified before the state legislators about the offshore law on behalf of the New Jersey Business and Industry Association. "Supporters ignore the job-killing impacts of higher rates."
A $6B to $7B price tag?
According to his estimates, 1,110 megawatts of offshore wind would cost at least $7 billion, before the costs of electrical transmission lines are considered. Supporters such as Lanard are backing lower numbers, closer to $6 billion. Other estimates from business groups run up to $14 billion.
New Jersey residents currently pay the seventh-highest electricity rates in the nation, according to the Institute for Energy Research.
The New Jersey developments come on the heels of a busy summer of announcements for offshore wind.
In August, the governors of Rhode Island and Massachusetts signed a memorandum of understanding stating they would collaborate on offshore projects in federal waters in Rhode Island Sound. In August, the governors of Maryland and Delaware wrote to President Obama asking for federal support for offshore wind to power federal agencies and military installations.
The industry also got a new advocacy arm via the creation of the Washington, D.C.-based coalition headed by Lanard. This summer, Interior Secretary Ken Salazar signed an agreement with 10 states, including New Jersey, to develop an action plan with priorities, goals, recommendations and specific steps for promoting offshore wind development (Greenwire, June 8).
None of this guarantees that offshore wind will become a reality in the United States. One variable is incoming governors who may not be behind projects proposed by their predecessors.
Cape Wind, slated for construction near the shores of Cape Cod, is the furthest along in terms of planning after that project obtained approval from the Interior Department this year. Yet it is still generating opposition before a single turbine appears in the water.
At a gubernatorial debate in Massachusetts this week, Massachusetts Gov. Deval Patrick (D) was the sole defender of Cape Wind, for example. He said the offshore project would help his state lead the clean-energy race, while his independent and Republican opponents slammed it as too expensive.
Christie of New Jersey will not be up for re-election until 2013 and is vowing to implement the state's energy "Master Plan," which aims for 3,000 installed megawatts of offshore wind by 2020.
In June, the New Jersey Department of Environmental Protection determined that there would be minimal environmental impact to bird, fish and marine life in 75 miles of coastal area under consideration for offshore wind development. There are a handful of companies proposing to erect turbines 3 to 20 miles off the coast, including a 20-megawatt project by Fishermen's Energy near Atlantic City.
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