EnergyWatch

New Jersey kicks off 2.4 GW offshore wind tender

While the US offshore wind market is still pestered by uncertainties on licenses and subsidies, New Jersey draws up a road map for achieving 7.5 GW by 2035.

Photo: Ørsted

New Jersey's route to 3.5 GW in offshore wind capacity is now settled. The New Jersey Board of Public Utilities (NJBPU) has given its green light to launch a public tender meant to add 1.2-2.4 GW to the 1.1 GW already allocated to Ørsted's Ocean Wind project.

Meanwhile, the regulator has also signed off on an even more ambitious plan for the state to have installed 7.5 GW in 2035.

"This second solicitation not only reinforces our commitment to fighting climate change and achieving 100 percent clean energy by 2050, but it secures New Jersey’s foothold as a national leader in the growing US offshore wind industry," writes New Jersey Governor Phil Murphy in a statement.

The auction will commence Thursday and is set to end on Dec. 10, 2020, with the NJBPU expecting to announce the winner next July.

In an extended sense, the approval of the strategy, compiled by Danish engineering group Rambøll on behalf of the state, means at least 1.2 GW in further capacity will be sent to tender in 2022. Similarly, subsequent offshore wind auctions will be held in 2024, 2026 and 2028.

"The environmental benefits and economic potential of offshore wind are more encouraging than ever in these difficult times,” writes NJBPU President Joseph L. Fiordaliso in the media release.

"By investing in clean energy now, we can help get thousands of New Jerseyans back to work while building a cleaner, healthier, and more resilient future for our children and grandchildren," he continues.

Lack of clarity for future auctions

The current situation for US offshore wind can otherwise seem less than unequivocally encouraging.

Clarity is still lacking on whether – and if so, taking what form – the Vineyard Wind project in Massachusetts' waters will receive an establishment permit in the wake of the extended environmental impact assessment initiated last year. Because this impact report is examining the cumulative effects on offshore wind at and near the site, the outcome could also carry consequences for other projects in the US.

In the same sense, the outlook for the country's Investment Tax Credit subsidy scheme for offshore wind appears a bit opaque.

Earlier this year, the Production Tax Credit setup for, among other things, onshore wind was extended on account of the Covid-19 pandemic. The same helping hand, though, was not offered to offshore wind. Legislation on prolonging ITC is under present consideration, but nothing has yet been ratified.

No matter what, though, New Jersey is hardly alone is banking on the domestic offshore wind build-out being unstoppable. After an initial coronavirus delay, adjacent New York State launched its second solicitation for up to 2.5 GW this summer.

Even though there are options for both an extension of Ocean Wind as well as a neighboring project site, under development by Shell and EDF, Atlantic Shores, it remains uncertain as to which projects will be able to bid in the ongoing auctions.

A sketch has, however, been drawn up concerning a large and suitable site at New York Bight. Although the area, located south of New York and east of New Jersey, has not made it to auction.

The federal Bureau of Ocean Energy Management (BOEM) – which manages the tenders – has not yet set a date, which prompted New York authorities this summer to urge that the timetable be respected.

"At some point, new lease areas will become critical," writes New York State Energy Research & Development Authority (NYSERDA) President and Chief Executive Alicia Barton.

The budding US offshore wind market has, though, been impacted by a series of delays in this last year.

Beyond Vineyard Wind, Ørsted has also postponed its Skipjack project off Maryland by a year, also due to the extra EIA report. As long as there's no resolution on the matter, it doesn't seem probable that further licensing auctions will be held, even though the preceding round brought in a pretty penny for the state treasury, IHS Markit Associate Director Max Cohen told EnergyWatch earlier this year.

"Leasing these areas while it's still completely uncertain if this EIS [US version of EIA report, -ed.] will be done will probably lead to discounted bids. So, if they are looking to maximize revenue to taxpayers, presumably they will want to have a successful final decision in December, and then go ahead with more leasing once the industry is all excited again," Cohen said at the time.

English Edit: Daniel Frank Christensen

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