The New Jersey Board of Public Utilities (NJBPU) has unanimously granted the state’s first award for offshore wind to Ørsted.
Ørsted’s 1.1 GW Ocean Wind project is expected to power roughly 500,000 New Jersey homes, generate $1.17 billion in economic benefits and create an estimated 15,000 jobs over its lifetime.
According to the NJBPU, today’s decision represents single largest award for offshore wind in U.S. to date and marks further progress toward meeting New Jersey’s goal of 3.5 GW of offshore wind by 2030, as well as Gov. Phil Murphy’s vision of 100% clean energy for the state by 2050.
“Today’s historic announcement will revolutionize the offshore wind industry here in New Jersey and along the entire East Coast,” says Murphy.
“Thanks to Governor Murphy’s leadership and his trust in the NJBPU to deliver upon the important promise of offshore wind, today we have taken another important step forward into our 100 percent clean energy future,” adds Joseph L. Fiordaliso, NJBPU president.
The offshore wind application window opened on Sept. 20, 2018, and closed on Dec. 28, 2018. The board received applications from three developers: Atlantic Shores Offshore Wind, a partnership between EDF Renewables and Shell New Energies; Boardwalk Wind, sponsored by Equinor; and the winning Ocean Wind, which is backed by a memorandum of understanding between Ørsted and PSEG Renewable Generation.
PSEG’s non-utility affiliates will provide energy management services and potential lease of land for use in the project development and execution phase. PSEG, which serves 2.2 million electric customers in New Jersey and has a long development partnership with Ørsted, has an option to become an equity investor in the Ocean Wind project.
Ralph LaRossa, president and chief operating officer of PSEG Power, says, “We have pledged our commitment and support of Gov. Phil Murphy’s clean energy agenda, and we know that offshore wind will play an important role in providing environmental and economic benefits to New Jersey.”
The NJBPU’s evaluation criteria included offshore wind renewable energy certificate (OREC) purchase price, economic impact, ratepayer impact, environmental impact, the strength of guarantees for economic impact, and the likelihood of successful commercial operation.
According to the board, the Ocean Wind project offered a first-year OREC price of $98.10/MWh. The levelized net OREC cost – which represents the actual OREC costs paid by ratepayers after energy and capacity revenues are refunded to ratepayers – is estimated at $46.46/MWh, with an estimated ratepayer impact of a monthly bill increase of $1.46 for residential, $13.05 for commercial and $110.10 for industrial customers.
In selecting the project, the board made the following conclusions:
· Ørsted’s Ocean Wind economic development plans were the most detailed and offered the most benefit to New Jersey. Its facility is estimated to result in net economic benefits of $1.17 billion to the state. Ocean Wind also provided the strongest economic guarantees to ensure local content, including manufacturing.
· Though 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.
· Ørsted provides the best chance of successful development due to its depth of knowledge, as well as global and regional experience and advanced stage of planning.
“The award of this long-term power purchase agreement means that Ørsted can now move ahead aggressively to develop the U.S. supply chain and start the process of ordering the towers, blades, foundations, cables, and hundreds of other parts and components that will be assembled into a massive wind farm,” comments Liz Burdock, president and CEO of the Business Network for Offshore Wind.
The board notes that it acted on the applications prior to July 1 in order to provide sufficient time for the winning bidder to qualify for federal investment tax credits that expire at the end of this year. It is estimated that these credits could save New Jersey ratepayers approximately 12% of the total project cost.
“We congratulate our network member Ørsted on winning this highly competitive bid,” adds Burdock. “We look forward to working with them as they mobilize the U.S.-based offshore wind supply chain to build, assemble and install their offshore wind farms by 2024-25 and operate them through to 2050.”
Denmark-based Ørsted, previously DONG Energy, is also developing the Revolution Wind and South Fork Wind Farm offshore projects in the Northeast. In 2018, the company acquired Deepwater Wind – developer of the Block Island Wind Farm – for $510 million, creating Ørsted US Offshore Wind. Ørsted also announced a new office in Atlantic City, N.J., last year.
“Today’s announcement firmly establishes a fast-growing global industry in New Jersey, which will create jobs and supply chain in the state,” says Thomas Brostrøm, CEO of Ørsted U.S. Offshore Wind and president of Ørsted North America. “Ocean Wind will ensure that the state and its residents not only benefit from clean, renewable power, but that they reap the rewards of being an early player in the offshore wind industry as it grows in the U.S.”