BPU again rejects pilot wind farm off Jersey coast

The state on Friday again rejected a pilot wind farm project off the New Jersey coast, arguing that the company's financial plan is unsound and would require a state subsidy so large it would make the energy produced too costly for ratepayers.

The company vowed to appeal the state's decision in court.

Fishermen's Energy, a Cape May-based group of commercial fishermen, has proposed building a five-turbine pilot wind farm about three miles off the coast of Atlantic City to generate up to 25 megawatts of clean energy. If the appeal is successful, it could be the first offshore wind farm in the United States connected to the electric grid.

"We have an active appeal. We'll go back to the court, and hopefully they will grant us relief," said Paul Gallagher, the company's chief operating officer and general counsel.

Under the state's energy master plan, companies seeking to produce clean energy must seek permission from the state Board of Public Utilities to get energy credits – state money paid for energy produced – to subsidize the cost of the projects. But the project's cost must be low enough to ratepayers so as to provide a "net benefit."

In March, the BPU rejected Fishermen's Energy's financial plan, because it depended on $100 million in federal grants and tax breaks that it had not yet secured. Then in May the company won a $47 million grant from the federal Department of Energy. When the BPU did not reconsider its decision in light of the grant, Fishermen's Energy asked a state appeals court to force the BPU to reconsider. The court told the BPU to revisit the issue.

In Friday's ruling, the BPU did not change its earlier decision, even while taking into account the $47 million grant.

The agency argued that the Fishermen's Energy proposal is based on securing the full $100 million in grants from the federal government and that there is still no guarantee that will happen.

With the $100 million, the company had argued that it could make the project succeed by receiving only $199 per megawatt hour from the state for the energy the wind farm produced. But the BPU argued that without the $100 million, the cost would be $263 per megawatt hour – making the energy far too costly for state ratepayers.

The state's system of providing financial subsidies to such projects — the subsidies are called offshore wind renewable energy certificates, or ORECs — is laid out in the Offshore Wind Economic Development Act.

Fishermen's Energy says it already has all the federal and state permits it needs to start construction. The company has said that if the BPU approved the plan, it could begin work onshore next year and continue with offshore construction in 2016.

The company has said that a successful pilot could entice wind industry contractors to set up in New Jersey, even opening factories to build the turbines locally, and creating more jobs.

This year, the Obama administration announced plans to sell leases for nearly 344,000 acres of sea floor off the New Jersey coast to companies seeking to build wind energy turbines. The area could support up to 3,400 megawatts of commercial generation, enough to power 1.2 million homes.

Fishermen's Energy has said it plans to bid for lease rights in federal waters off New Jersey to develop a larger project than the pilot wind farm that was the focus of the BPU ruling on Friday.

Tags:
  Environm