In N.J., a pilot project’s failure underscores new industry phase

Source: David Iaconangelo, E&E News reporter • Posted: Friday, December 21, 2018

A twice-frustrated offshore wind pilot proposed for waters near Atlantic City may have died a final death this week, after New Jersey’s utility regulator denied its application for a third time.

The Board of Public Utilities (BPU) said in an order Tuesday that the price of the three-turbine, 25-megawatt Nautilus pilot project was too high and the benefits too weakly substantiated, siding with the testimony of the state’s ratepayer advocate.

But the project, first proposed in 2009, was mainly a casualty of the state’s eagerness to aim higher, toward the development of bigger, utility-scale offshore farms.

A separate order from the BPU adopted rules that described how developers would get paid for producing power via offshore renewable energy credits (ORECs), a key piece of state planning for the industry.

BPU President Joseph Fiordaliso said the agency was anticipating “greater net benefits with larger-scale projects” proposed as part of an ongoing solicitation for 1,100 megawatts of offshore wind. That solicitation, set to close on Dec. 28, is the nation’s biggest single invitation for projects.

The original developer, Fishermen’s Energy, saw its pilot project lifted up as a model of the state’s energy leadership, then abruptly dropped, by former Gov. Chris Christie (R).

“New Jersey was poised to be the first state in the country” to build an offshore wind pilot, said Doug O’Malley, director at Environment New Jersey. “Christie both stoked those hopes and squashed them.”

Then a new governor was elected, and suddenly the project looked like it was on the fast track. In May, Gov. Phil Murphy (D) signed a law requiring regulators to approve a small-scale pilot project in waters “offshore of a municipality in which casino gaming is authorized,” as long as they found it to benefit the state. Fishermen’s Energy linked up with an experienced partner, EDF Renewables, which would have taken over work on the pilot once approved.

The developers said Nautilus would give labor unions early experience working on offshore projects and help establish supply chains in the state, among other benefits.

But as other East Coast states started to undertake more ambitious plans and well-heeled Europeans made gestures of serious interest, support for Nautilus peeled off, including from environmental groups that once championed it. Opposition from the state Division of Rate Counsel may have dealt a death blow, saying in a filing that the industry was evolving too fast for the lessons learned through Nautilus to matter much.

The pilot “has had nine lives,” said O’Malley, who had maintained his group’s support. “I think it’s going to be hard for Nautilus to come back.”

The manager of Fishermen’s Energy, Paul Gallagher, did not return phone calls requesting comment.

Doug Copeland, regional development manager at EDF Renewables, called the decision “disappointing” and said it would “delay workers’ access to local and real-world training” and “slow early investments in critical supply chain infrastructure”.

One day after BPU’s order, though, EDF announced a major step into the state’s market for utility-scale projects.

The company has entered into a joint venture with Shell New Energies, it said, and acquired the lease for a 183,000-acre area near Atlantic City from Baltimore-based US Wind Inc. It declined to disclose figures associated with the acquisition.

The lease could contain enough turbines to generate 2,500 megawatts, or electricity for about 1 million homes, according to the company.

Behind strong state and federal support, said Tristan Grimbert, president and CEO of EDF Renewables’ North America operations, U.S. offshore wind was “quickly advancing.”

“The industry is well-positioned to meaningfully contribute to the New York and New Jersey economies through employment and supply chain opportunities,” he said in a statement.