BPU Finally Releases Offshore Wind Financing Rules

The New Jersey Board of Public Utilities (BPU) has released their Rules for Funding Offshore Wind Projects today. These rules will set up a process to fund offshore wind developers for projects built off New Jersey’s coast. Governor Murphy’s Executive Order No. 8 sets a goal of providing 3,500 megawatts of offshore wind by 2030 with the first 1,100 megawatts implemented as soon as possible.

“The rules are finally out, and this is the first major step in making offshore wind a reality in New Jersey. Next week is the eighth anniversary of OWEDA and we’ve been waiting almost eight years for these rules. The Murphy Administration managed to get done in eight months what the Christie Administration wouldn’t do for eight years. New Jersey has enough potential of offshore wind to meet 1/3 of our electrical needs. We can grow our economy and create jobs while protecting our environment. Offshore wind off our coast could feasibly power 1.2 million homes with clean energy but first we must be able to finance the windmills and that’s why this rule is so important,” said Jeff Tittel, Director of the New Jersey Sierra Club. “We want to give the Murphy Administration credit for releasing these important rules that allow wind developers to move forward with financing their projects.”

In July, the BPU hosted a public hearing to gather input on a Straw Proposal concerning the OREC funding mechanism. They provided a list of nine questions to help facilitate the solicitation of the first 1,100 megawatts of offshore wind. In response to those questions, we believe that the BPU should put out an RFP or solicitation as soon as possible for the initial 1,100 MW. After the solicitation for the first 1,100 MW is established, we should send out for the rest as soon as possible, allowing as many companies to compete as desire to do so in an open and transparent process.

“These rules are a financial framework for procedure. There are still a lot of questions that the BPU needs to address, including the cost-effectiveness of the projects, economic benefits of them, and the environmental benefits of avoided pollution. We hope the project solicitation will include clear standards for the BPU to assess these variables when measuring projects against one another,” said Jeff Tittel. “We need to be sure that net benefits to New Jerseyans are maximized in an apples-to-apples comparison that includes location and transmission considerations.”

Governor Christie and his administration have failed to fully implement the Offshore Wind Energy Development Act (OWEDA), which was signed in 2010. It was supposed to establish a funding mechanism for offshore wind, to jump start the manufacturing of wind turbines in our state, and to develop windmills off our coast. Since it passed, OWEDA implementation projects have been on hold because the Christie Administration has blocked the creation of a funding mechanism.

“There’s been an eight-year delay under Christie and now we can go forward, Without these rules, wind developers could not borrow capital to build these projects. This is because without insurance of a funding mechanism, it’s difficult to borrow money from financial institutions. Now, we can work towards our current goal of 1100 MW and hopefully get the process going for 3500 MW of offshore wind by 2030. These projects will take years to build so we need to get the finances, studies, impacts assessments done now,” said Jeff Tittel. “This rule either needs to be fixed or followed up by another rule with clearer standards for offshore wind projects but at least now the developers can bank on the fact that there will be a program.

Wind energy is renewable, clean, and thousands creates jobs. The East Coast, with its large metropolitan areas and dense suburbs is hungry for jobs, investment and energy. Offshore wind not only creates jobs in installing, operating, and maintaining wind turbines but the OWEDA also calls for investment in manufacturing wind turbines.  This would create jobs rebuilding the Paulsboro Port, building factories, manufacturing the steel for the turbines, and assembling and transporting the windmills.  Jobs would also be created building the substations and electric connections to serve the windmills. As we continue to rebuild our coast in the wake of multiple storm events we need to invest in clean, renewable energy sources that do not contribute to climate change.

“It’s important that we’re moving forward with offshore wind because it’s the most reliable and cost-effective form of offshore power. There are at least five different companies looking to build wind off our coasts. These rules will help them compete and get these projects in motion. We need to get the finances, studies, impact assessments in place now to jumpstart the manufacturing of wind turbines in our state, and to develop windmills off our coast. The Murphy Administration should be working to make sure we build these wind projects and stop the four proposed natural gas plants that will undermine them,” said Jeff Tittel, Director of the New Jersey Sierra Club. “New Jersey has the Saudi Arabia of wind off our coast and now have a chance to really get offshore wind moving and benefit from the economic and environmental benefits and clean jobs that come with it.”