NJ rejects Fishermen's subsidy plan
New Jersey regulators have rejected Fishermen’s Energy’s proposal to have ratepayers subsidize its 25MW pilot offshore wind farm, leaving the project with an uncertain future.
In its 4-0 decision, commissioners adopted a recommendation by Board of Public utilities staff, which argued that the five-turbine array facing Atlantic City in state waters was not financially viable.
Their order will be signed next week to allow one of the commissioners to add her reasons in support of the majority decision, which differ somewhat from the others, a spokesman tells Recharge.
Today's vote culminates an almost 1,000-day review process during which Fishermen’s has struggled to gain BPU's approval. The developer is expected to appeal the decision in court.
Fishermen’s is the first developer to apply for New Jersey’s subsidy programme that will incentivize 1.1GW of offshore wind energy by 2020. It will award offshore wind renewable energy certificates (ORECs) to operators of wind farms on a megawatt-hour production basis.
Investor-owned utilities in the state will be obliged to purchase electricity from the offshore facilities and also ORECS, which they can use to help comply with New Jersey’s renewable portfolio standard.
To qualify for the OREC programme, which BPU will oversee, Fishermen’s must show that its project will provide a “net economic benefit” to New Jersey through job creation, economic development and other performance metrics.
BPU staff says that the project will not do this, a conclusion that Fishermen’s strongly disputes. Staff also had other objections including that the project relies too much on a possible US Energy Department grant for financing.
In mid-May, DOE is scheduled to select two or three projects among six for $46.6m each in grants under an advanced offshore wind technology demonstration program. Winners will need to match on a 1:1 basis with their own money.
The funding will go to complete remaining engineering and design work, plus to help complete construction and grid integration of the projects by 2017.
BPU staff contends if Fishermen’s does not win the grant, private financing sources would likely walk away, leaving New Jersey ratepayers left to cover as much as $187m in project costs.
“In a way we are reliant on DOE. They are really vital to this project. It would be hard to replace that money,” Fishermen’s chief executive Chris Wissemann said on a conference call earlier this year.
According to BPU staff, another element of uncertainty is whether Congress will renew the investment tax credit for offshore wind which expired last year.
“Both of which have to be taken into account to reduce the (project’s) power price,” Wissemann said earlier. “Our price is $199/MWh. It literally is a stone’s throw from the Cape Wind price for a full commercial-scale project. It’s lower than any other demonstration scale project in the US.”
Meanwhile, environmentalists expressed disappointment with BPU’s decision.
"We are quickly becoming a laggard on off-shore wind and we’re now watching other Atlantic coastal states moving ahead without us," Doug O’Malley, executive director of Environment New Jersey, says in a statement. He calls the BPU move “foolhardy.”