New Jersey is doubling down on its efforts to create a new offshore wind sector, with $350 million set aside to award corporate tax credits to companies that make major investments in the sector and another $265 million allocated to help fund the creation of the New Jersey Wind Port.

The $265 million, which Gov. Phil Murphy and the legislature allocated in November from a fund created to pay down state bond debt, brings the total committed to the wind port to about $500 million. The funding commitments for the wind port, which is located on the Delaware River in Lower Alloways Creek, are now more than 25% higher than the project cost estimates of $300 million to $400 million released when Murphy first announced the project in June 2020.

In a separate move, the New Jersey Economic Development Authority (NJEDA) in December started accepting applications for a program, the Offshore Wind Tax Credit Program, that the agency expects will typically offer tax credits equal to 40 to 60% of a company’s qualified capital investments in a “major, land-based offshore wind industry project.” To be eligible, a business must invest $50 million or more in the project, or invest $17.5 million in the project if the company is a tenant in a space that the owner invested $50 million or more.

New Jersey is increasing its commitment to the wind sector as other states on the East Coast — among them Virginia, New York, Massachusetts and Maryland — are making their own investments to create an in-state offshore market that also could attract supply chain business from out-of-state projects.

“To me, the story is New Jersey is putting our money where our mouth is,” said Brian Sabina, chief economic growth officer for NJEDA, which oversees much of the expenditures on the wind port. “We are crystal clear that we believe New Jersey is, and will continue to be, one of, if not the, hub for offshore supply chain developments in the offshore wind industry in the U.S.”

New Jersey’s latest round of offshore wind funding follows a commitment of $200 million to the wind port put in the state budget by Murphy and the legislature in June and a $13 million commitment to the project by the New Jersey Board of Public Utilities (BPU). In addition, the governor and legislature awarded $44 million to the state Department of Transportation for a dredge project that will deepen the channel connecting the port and the main channel of the Delaware River.

Sabina said that the state is “not done” with allocating money to the project and suggested that one source of future funds could be the federal government, including the Build Back Better bill. However, that bill stalled in mid-December.

“This is not a one-year, one-time investment,” Sabina said of New Jersey’s commitments. “This is to start getting ahead on making the down payments on the infrastructure we need to drive our economy and our [economic] climate in the right direction.”

Proven Demand

New Jersey has set a target date of 2024 to complete the port, which broke ground Sept. 9. The port, and the effort to shape it as a hub that will serve the regional wind industry supply chain, are key parts of Murphy’s goal to create a state offshore wind sector that will generate 23% of the state’s energy by 2050. The state aims to create wind projects totaling 7,500 MW by 2035. (See NJ Breaks Ground On Offshore Wind Hub.)

The plans outlined on the wind port website, which calls it the first purpose-built wind port on the East Coast, include a 30-acre marshalling area for component assembly and staging; a dedicated overland heavy-haul transportation corridor; and a heavy-lift wharf with a dedicated delivery berth and an installation berth that can accommodate jack-up vessels. Nacelle manufacturers MHI Vestas and General Electric have committed to creating nacelle plants at the port, and the developers of the three offshore wind projects approved by New Jersey so far have also agreed to use the port. German manufacturer EEW Group is building a monopile factor in the nearby Port of Paulsboro. (See New Jersey Shoots for Key East Coast Wind Role.)

The BPU in 2019 approved the 1,100-MW Ocean Wind 1 project, developed by Danish developer Ørsted, and on June 30 approved Ørsted’s 1,100-MW Ocean Wind 2 and the 1,510-MW Atlantic Shores project, a joint venture between EDF Renewables North America and Shell New Energies US. The BPU is planning to hold three more solicitations over the next five years.

Sabina said the number of companies interested in putting money into New Jersey’s offshore wind industry and wind port shows the state’s commitment is well placed. He cited the fact that 16 companies submitted nonbinding offers to become tenants at the wind port, including Siemens Gamesa Renewable Energy, Vestas-American Wind Technology and Beacon Wind. (See NJ Wind Port Draws Offshore Heavy Hitters.)

“Demand for this infrastructure is there,” Sabina said. “And that’s giving us the confidence to say, ‘Let’s start making sure that we’re ahead of the game in terms of the next phase of design and construction.’”

Jockeying for Out-of-state Investors

Sabina said the tax credit program grew out of the awareness that a vigorous competition between states and countries is underway for investment dollars in the offshore wind sector. New Jersey needed a way to attract “major Tier 1 suppliers and other major large, maybe Tier 2, manufacturing facilities to come and anchor their supply chains here in our state,” he said.

“We know that those same companies are considering investing in other states. We know those same companies are considering investing in other regions,” he said. “We needed a tool to help make sure that when we talk with those companies — Siemens, EEW, Vestas, GE — we had a tool to help them partner and help them de-risk their investments in our state.”

Applicants can apply for a tax credit that is equal to up to 100% of the investment, and the recipient can use the credit to reduce taxes or sell it to someone else seeking to do the same. To be eligible for a credit, companies must be in a business that is located in the state and is “related” to the offshore wind industry. The company, along with meeting the capital investment requirements, also must create jobs, starting at 100 jobs in the first year and rising to 300 jobs by the fifth year.

To get a credit equal to 100% of the project investment, the developer must show that New Jersey will receive an amount in sales, payroll, property and other taxes that is equal to 110% of the total capital investment. NJEDA officials say that their modeling shows most applicants will be eligible for credits equal to 40 to 60% of their capital investment.

“That’s really what this tool is about,” Sabina said. “If you’re going to do a large major manufacturing facility or other large offshore wind project, we want to have a tool to co-invest with you so that you can anchor your supply chain in our state, in our region.”

A similar effort to create an in-state industry has spurred efforts in Virginia, which announced in October that Siemens will establish a new plant for offshore wind blades at the Portsmouth Marine Terminal. That announcement followed two months after Dominion Energy said it would create a staging and assembly facility on 72 acres at the terminal.

In Maryland, developers of two offshore wind projects awarded by the Public Service Commission said they would use port facilities at Tradepoint Atlantic in Sparrows Point outside Baltimore and in Ocean City for marshalling, operations and maintenance. Sparrows Point is also the site of a planned monopile plant.