Sunday, March 4, 2012

Offshore wind blowing into NJ Legislature-March 5 2012

The U.S. Department of Energy announced on Thursday that it plans to pump a record $180M into offshore projects over six years, including an initial commitment of $20M in fiscal year 2012. 

That should be great news for the offshore wind industry, for alternative energy, and particularly
for New Jersey. 

Why New Jersey?  

  1. The U.S. Department of Interior has declared that the greatest offshore wind energy potential--some 1,000 gigawatts of electricity, or one quarter of national demand-- lies off the Atlantic Coast
  2. In 2010, New Jersey adopted a robust package of financial incentives for offshore wind development, setting a target of a minimum of 1,100 MW of wind generation off the state's  with a more ambitious goal of attaining 3000 MW by 2020, and
  3. Those financial incentives encouraged several major developers to propose plans for wind farms off the state's coast.
But ill winds are blowing through New Jersey offshore wind energy's prospects

Despite the encouraging news above, the prospects for construction of wind energy farms off the Jersey coast appear less certain today than they did when the legislation was enacted.

Some primary reasons: 
  1. The cost of the energy that the projects would deliver to the regional grid appear to be much higher than expected.
  2. The booming development of the Marcellus Shale natural gas play in neighboring Pennsylvania (and perhaps some day in New York) promises a competing source of energy at lower prices than what currently planned offshore wind farms can deliver.
  3. The Administration of New Jersey Governor Chris Christie, who championed offshore wind energy earlier in his tenure, is sounding less enthusiastic about it today. New Jersey businesses pay some of the highest energy rates in the country and public subsidies for offshore wind would drive those prices even higher. Christie's mission is to offer business reasons to stay in New Jersey. Even higher rates for electricity undercuts that mission.
Two recent consulting studies undertaken for the state raise serious questions about the project furthest along in the competition for state financial support-- Fishermen's Atlantic City Windfarm (FACW).

The most damaging of the two, prepared for the New Jersey Division of Rate Counsel by Acadian Consulting Group, recommended that the state turn down the project. It includes the chart below addressing Fishermen's projected electric rates and economic effects.
Page  4 of Arcadian Study Group evaluates economic impact of energy rates

A second study, prepared by
Boston Pacific, a Washington D.C.-based firm and OutSmart,
a Dutch firm specializing in offshore wind farms, did not recommend that the project be rejected, but questioned a number of assumptions made by the developers.

Assembly Committee will meet tomorrow to test the winds

Assembly Telecommunications and Utilities Committee Chairman Upendra J. Chivukula will take testimony from wind energy developers and other interested parties at a hearing scheduled for 10 a.m. Monday, March 5, in Trenton.

Presenters will include: Stephanie A. Brand, Director of N.J. Division of Rate Counsel; Matt Elliott, Global Warming and Clean Energy Associate for Environment New Jersey; Robert Gibbs, Vice President, Garden Shore Offshore Energy and Manager, Development Renewable Energy for PSEG; Daniel Cohen, President of Fisherman's Energy; Stephanie McClellan, Director of Strategic Initiatives Outreach for Atlantic Wind Connection, and David Roncinske of Local 454 Wharf and Dock Builders.

In light of the chilling effect that the two studies likely had in the investment community, the hearing will be an important opportunity for offshore wind advocates to balance the picture. As a prime sponsor of the Offshore Wind and Economic Development Act, Chairman Chivukula is among them. 

In a news release announcing the hearing, he said:

"Wind power needs to be a vital part of our energy portfolio as we explore all possible domestic renewable sources to compete in the growing global marketplace for clean energy. We welcome the Obama Administration's new initiative of substantially increasing investment in this emerging industry by jump starting lower cost high technologies that will generate long-term savings for the industry and benefit ratepayers."

You can listen to the hearing live by clicking here.  After the meeting is over, a recording will be available by going here and then clicking on the Assembly Telecommunications and Utilities link.

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