Dive Brief:
- New Jersey on Friday selected Ørsted to construct a 1.1 GW offshore wind project 15 miles off the coast of Atlantic City, finalizing the first of three solicitations the state is pursuing to acquire 3.5 GW of offshore wind power by 2030.
- The Ocean Wind project is the largest offshore wind procurement in the country to date, and is expected to generate almost $1.2 billion in benefits to the Garden State. Residential customers will pay about $1.46/month for the project, say officials.
- The New Jersey Board of Public Utilities (BPU) unanimously granted the award after concluding Ørsted's economic development plan was the most detailed and its environmental protection plan was the most complete of the proposals reviewed.
Dive Insight:
The United States has been slow to start development of its offshore wind industry, but the sector is picking up speed.
In April, Massachusetts approved the state's first offshore wind contracts for 800 MW. This month, Connecticut lawmakers passed a bill to solicit 2 GW of offshore wind capacity. And New York last year issued a request for proposals to procure 800 MW or more of offshore wind resources.
New Jersey's award, the first above 1 GW in the United States, is a major step for the industry, said officials.
Last year, New Jersey Gov. Phil Murphy, D, finalized a 50% renewable portfolio standard by 2030, and directed the BPU to hold offshore wind solicitations totaling 3,500 MW. Two additional 1,200 MW solicitations in 2020 and in 2022 are expected.
"Today's historic announcement will revolutionize the offshore wind industry here in New Jersey," Murphy said in a statement. The selection of Ørsted was "a monumental step" in helping the state develop as a leader in the sector.
The state's application process opened in September 2018 and pulled in three applications: Atlantic Shores Offshore Wind — a partnership between EDF Renewables and Shell New Energies; Boardwalk Wind, sponsored by Equinor; and Ocean Wind.
The BPU noted the Ocean Wind project was backed by a memorandum of understanding between Ørsted and PSEG Renewable Generation.
"While all of the proposed projects would help New Jersey reduce greenhouse gas emissions, Ocean Wind's environmental protection plan, including mitigation of environmental impacts, was most complete and most advanced; the developer's experience in this arena further distinguished its application," the BPU said in a statement.
The timing of the selection was made to allow Ørsted to qualify for federal tax credits that expire at the end of this year, regulators said. According to the BPU, the credits could save New Jersey ratepayers approximately 12% of the total project cost.
In evaluating projects, the BPU said it considered economic impacts, the price to ratepayers, the likelihood of success, and the purchase price of offshore wind renewable energy certificates (OREC).
Regulators last year enacted an OREC Funding Mechanism, which established how the state would fund offshore wind projects and how revenues earned from the project would flow back to ratepayers.
Regulators said the levelized net OREC cost is estimated at $46.46/MWh, which represents the actual OREC costs paid by ratepayers. Commercial customers will pay a little more than $13/monthly for the project, while industrial customers will see bills rise about $110/month.
Ørsted said it plans to launch its Pro-NJ Trust fund in Cape May and Atlantic Counties, to provide up to $15 million in grants to support local infrastructure and businesses. The company said it is also proceeding with plans to establish an operations and maintenance base in Atlantic City.
