By Michael Brooks
Ørsted’s 1,100-MW Ocean Wind project won the New Jersey Board of Public Utilities’ first offshore wind power solicitation last week, setting the record for the single largest award for the resource in the U.S.
The board selected Ocean Wind over two other projects: Atlantic Shores Offshore Wind, a partnership between EDF Renewables and Shell New Energies; and Boardwalk Wind, sponsored by Equinor.
The BPU said it evaluated the three proposals based on the 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.”
It said it found Ørsted’s economic development plans were “the most detailed and offered the most benefit to New Jersey,” citing its promise of $1.17 billion in net economic benefits.
The board also said Ørsted offered the “most complete and … advanced” plan for minimizing environmental impacts, and that its experience and knowledge gave it “the best chance of successful development.”
The Danish company offered a first-year OREC price of $98.10/MWh for the project. The levelized net OREC Cost — the actual cost paid by ratepayers after energy and capacity revenues are refunded to ratepayers — was estimated at $46.46/MWh. The BPU said it will increase residential customers monthly bills by $1.46, with average increases of $13.05 for commercial customers and $110.10 for industrials.
The BPU did not respond to a request to provide details on proposals by the competing bidders.
Ørsted’s bid was submitted in a partnership with PSEG Renewable Generation. PSEG will “provide energy management services and potential lease of land for use in project development,” the companies said in announcing their partnership in December.
The BPU approved the project “based on the analysis that Ørsted’s project offered the strongest contribution to New Jersey’s economy, combated climate change, provided added reliability to the transmission network, and did so at the lowest reasonable cost and risk,” it said.
The project covers nearly a third of the state’s target of 3,500 MW in offshore wind power by 2030. Gov. Phil Murphy has also set a goal for 100% clean energy by 2050; he released a draft energy master plan for achieving that goal earlier this month. State regulators expect to seek an additional 1,200 MW of OSW in 2020 and another 1,200 MW in 2022.
“Today’s historic announcement will revolutionize the offshore wind industry here in New Jersey and along the entire East Coast,” Murphy said in a statement. “This award is a monumental step in making New Jersey a global leader in offshore wind development and deployment.”
Ocean Wind will be located 15 miles off the coast of Atlantic City. Construction is expected to begin in “the early 2020s,” according to Ørsted, with the project operational in 2024.
“Today’s announcement firmly establishes a fast-growing global industry in New Jersey, which will create jobs and supply chain in the state,” said 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.”
The BPU said that by acting now it hoped to provide the winning bidder time to qualify for federal investment tax credits that expire at the end of 2019. “It is estimated that these credits could save New Jersey ratepayers approximately 12% of the total project cost,” the board said.
