Offshore wind energy development lagging due to costs, bureaucracy, committee told

TRENTON – New Jersey’s chance to establish the nation’s first offshore wind energy program is being put at risk by a combination of factors: high up-front costs, lengthy permitting processes, and lack of a dependable pipeline of projects.

That is what business, and government witnesses said during today’s Assembly Telecommunications and Utilities Committee hearing into the status of the state’s pursuit of offshore wind energy.

But representatives of labor and the environment countered that despite those issues, New Jersey must pursue wind energy because it will mean thousands of jobs, less reliance on fossil fuels, and a possible rebirth of some manufacturing.

New Jersey’s sole applicant  – Fishermen’s Energy – has its 25-megawatt, 2.8-mile-offshore proposal winding its way through the administrative process with the Board of Public Utilities, and its president, Daniel Cohen, sought to address cost issues raised by the Division of Rate Counsel.

Rate Council chief Stefanie Brand earlier rated Fishermen’s Energy’s plan as the world’s most expensive if it goes through, but Cohen couched it differently: “Most expensive per megawatt installed.’’

Later, he added, “We’re sharpening our pencils, so we won’t be deemed the most expensive, no matter how you measure it.” He said that the average cost per residential ratepayer will be 17 cents a month.

Brand told the committee that New Jersey’s wind energy statute is functioning properly, ensuring that subsidies will not be paid out until a project is generating electricity.

She said that “We can’t make up for the reluctance of lenders to fund these projects.  If banks believe it is too risky to fund we shouldn’t ask the ratepayers to fund it.”

Cohen and environmentalists said such smaller pilot or demonstration projects are essential to laying the groundwork for large-scale projects, but Brand cautioned that “The worst thing we could do is have a pilot that doesn’t work.’’

“The state must not rush into long-term contracts until the state has determined that there are net economic benefits realizable through this promising technology,” she said.

In order to realize those benefits, the permitting process, which can take six to eight years at the federal level, must be cut in half, according to Rob Gibbs of Garden State Offshore Energy.

In addition, in order for a state program to have long-term success that entices manufacturers to make wind facility components here rather than import them from overseas, companies must be confident that there is in place a “sustained, orderly queue of projects,’’ Gibbs said. “They don’t want to build a factory and lay off workers two, three years down the road. If they are assured of a six- to 10-year pipeline of projects, they will come.’’

Tax incentives are necessary to kick-start New Jersey’s effort, environmentalists and labor leaders said.  A representative from Local 454 Wharf and Dock Builders said that if New Jersey takes the lead it will mean tens of thousands of construction-related jobs.

State Sen. Jim Whelan, (D-2), Atlantic City, reminded the committee that New Jersey’s largely dormant boat-building industry could be revived if this offshore wind energy program gets off the ground.

He talked of how New Jersey is at a crossroads. “We are in a race with other states around the nation, but particularly on the Eastern Seabord, to be first. Whoever gets there is likely to become the hub of an industry from the Carolinas as far up as New England.’’

And Matt Elliott of Environment New Jersey, acknowledging the concerns about the time-consuming bureaucracy and high costs, told the committee that “I think we’re forgetting why we came here.’’ He reminded everyone that New Jersey is the most densely populated state, and suffers from some of the nation’s most polluted air and water.

“Remember why we made offshore wind such an important priority,’’ he said.

Offshore wind energy development lagging due to costs, bureaucracy, committee told