Fishermen's pins hopes on DOE

Fishermen’s Energy is hopeful that if the US Energy Department in May approves a $46.6m grant for its 25MW pilot offshore wind project, state regulators will qualify it for ratepayer subsidies the following month.

“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.

The five turbine array, which would be sited in state waters in the Atlantic Ocean 4.5km off Atlantic City, is one of seven offshore wind project awarded $4m each by DOE in 2012 under its Advanced Technology Demonstration Program.  Statoil has since withdrawn its Hywind project from Maine.

On 15 May, DOE is due to select up to three proposals to go forward and provide each with a grant, which the winners would 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.

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.

Fishermen’s has struggled to win project approval from the New Jersey Board of Public Utilities (BPU) – the review process has dragged on for 950 days, according to Wissemann.

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. Wissemann says that BPU’s consultants agree that it will generate $33m more in benefits than costs to taxpayers.

At the last meeting with BPU on 20 December, Wissemann says staff did not support the project, saying that it exposed ratepayers to too much risk. “The reality is that we as the owner of the project have absorbed all the risks,” he argues.

BPU staff also cited uncertainty surrounding whether DOE will award additional funding to the project and 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,” says Wissemann. “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.”

He thinks that Fisherman’s is in a “really good position” to win the DOE grant, noting that the project is five years into development, while the other five pilots DOE is weighing have advanced one or two. Fishermen’s also has all permits, the electrical interconnection and much of the engineering done. “We are literally ready to go upon approval by BPU. Nobody else is in that situation,” he adds.

As for the ITC, it’s “out of our hands,” Wissemann says, calling it a “jump ball” on whether Congress will extend it. could go either

“What we think is that BPU is sort of waiting and watching to see that we can indeed secure both of these incentives and be able to deliver a project that really is as cost-effective as any project, commercial –scale or otherwise,” he says.

Elsewhere, he said that XEMC, the project’s proposed turbine supplier, has signed a memorandum of understanding with the South Jersey Port Corporation, which operates the Port of Camden. It includes a commitment to build a production plant there if certain preconditions are met including New Jersey enacting the OREC programme and the state-owned Chinese vendor winning a substantial turbine order for an offshore wind project along the east coast.

“XEMC was the only manufacturer that was willing to commit to anything in NJ,” Wissemann says. A subsidiary of parent company XEMC Group would own a majority of Fishermen's project.