Originally published in Politico
The state Senate Environment and Energy Committeeadvanced a bill Monday that establishes a new model for New Jersey to solicit offshore wind projects.
The vote was 4-0, with one abstention.
The bill, NJ S3985 (18R), sponsored by Sen. Bob Smith (D-Middlesex), would expand the definition of a “qualified offshore wind project” to include “offshore wind transmission facility,” meaning the state Board of Public Utilities could issue requests for proposals for generation and transmission projects. Developers would have to submit separate bids for each type of project, whether for turbines or for the cables and facilities required to bring the wind power to shore.
The bill would also expand the definition of an offshore wind renewable energy certificate, or OREC, the tradable commodity by which offshore wind is financed. Under the bill, the OREC now represents one megawatt hour of electric generation transmission transfer capability — the movement of power — in addition to its original, more limited meaning: for one megawatt hour of electric generation — the creation of power.
As part of New Jersey’s first 1,000-megawatt offshore wind project — for which Ørsted won the bid — the state requested that developers submit “bundled” proposals to build both wind facilities and transmission lines. Last year, environmental and industry groups wrote to Gov. Phil Murphy and the BPU, criticizing the “bundled” proposal, arguing it was not a cost-effective move.
In an interview with POLITICO last week, Smith seemed to agree.
“In other countries where they’ve done offshore wind, they frequently get the best economic deal for the ratepayers in allowing the two segments of this to be bid separately,” Smith said.
Utility customers subsidize wind projects through charges on their utility bills.
During Monday’s hearing, the Utility and Transportation Contractors Association supported the bill, as did offshore wind developer Anbaric.
“Do we want to continue with the same model of bundling all project components together … or do we move to a planned, open-access transmission model where the state would look at all the scheduled solicitations and those that may come in the future and determine the most cost-effective and efficient way to bring the power to shore?” said Janice Fuller, president of New Jersey OceanGrid at Anbaric, referencing a central point of discussion at a conference hosted by the BPU earlier this month.
“This legislation will ensure that all options used in the offshore wind industry around the world are available to the BPU, but, importantly, it does not contain the board’s decision-making,” she said.
Equinor, Ørsted, the Chamber of Commerce Southern New Jersey and the Division of Rate Counsel opposed the bill.
“There may be benefits to moving to a planned transmission system for offshore wind but there are also significant risks if New Jersey moves too quickly in this direction without further study,” Ørsted spokesperson Gabriel Martinez said in an email.
Brian Lipman, litigation manager for the Division of Rate Counsel, testified that the Rate Counsel was not opposed to open access under “proper circumstances,” but raised concerns about affordability.
“This bill places too much of a burden on New Jersey ratepayers,” Lipman said. “This amendment would put 100 percent of the cost on New Jersey ratepayers and foreclose the ability to share the costs of the transmission lines with other states.”
Murphy has promised to install 3,500 megawatts of offshore wind by 2030, and under his direction, the BPU will solicit 1,200 megawatts of offshore wind energy in 2020 and 2022. Recently unveiled models in the Integrated Energy Plan projected the state would need to develop 11 gigawatts of offshore wind by 2050.