All posts tagged 'New Jersey Board of Public Utilities'

Offshore Wind: Will New Jersey Take the Opportunity to Lead?

February 7, 2013 16:30
by Marshall McLean

Is New Jersey placing the cart before the horse when it comes to the establishment of rules regulating the State’s Offshore Renewable Energy Certificates?  Instead of spending time analyzing how to mitigate the risks of possible state appropriation of OREC funds, let’s build a project already!

In August of 2010, New Jersey Governor Chris Christie signed the Offshore Wind Economic Development Act to “spur economic growth in the Garden State through the development of renewable energy resources and the creation of green jobs.”

The legislation, which established the creation of an offshore wind renewable energy certificate program (OREC), is the Country’s first attempt to make financial assistance and tax credits available for businesses that construct manufacturing, assemblage and water access facilities to support the development of qualified offshore wind projects.

This of course was exciting news in 2010.  Since that time however, the wind industry has experienced tremendous growing pains as a result of a multitude of contributing factors including a glut of cheap natural gas developed through fracking technology, a severe recession, and - perhaps most influentially - the uncertainty of the renewal of the industry’s most valuable Federal incentive: the Production Tax Credit (PTC). 

This uncertainty had a tremendously negative impact on wind development in the United States.  But sun has started to rise: the PTC has been renewed, the Atlantic Wind Connection has continued to move forward with the proposed construction of an offshore transmission backbone in the Atlantic Ocean, and a majority of the general public strongly supports the development of offshore wind.  New Jersey once again finds itself at the vestibule of change, possibly leading the way towards the creation of an offshore wind industry in America, whose footholds are based firmly in the Garden State.

Yet despite this opportunity and the general sense of optimism, offshore wind continues to face political and bureaucratic headwinds in New Jersey.  Since Governor Christie signed the law in 2010, the New Jersey Board of Public Utilities (BPU) has struggled to adopt rules governing how offshore wind developers earn revenue from the electricity that their turbines produce.  It unfortunately appears that minimal progress has been made in determining how the OREC funding mechanism will work, and how projects that are “shovel ready” will be able to demonstrate that they are “qualified offshore wind projects”. Many would argue that this delay could frustrate the goals of the State’s Energy Master Plan which has set the ambitious goal to develop 1,100 megawatts of offshore wind capacity by 2020.

While the BPU’s need to get things right is laudable, the question remains whether the delay will threaten New Jersey’s ability to become the Country’s leader in offshore wind.  Maryland, Delaware, Maine and Massachusetts have all made aggressive steps to become the geographic center of the East Coast’s offshore wind industry.  The delay is also problematic when taken in the context of the PTC, which will only be available to projects that begin construction in 2013.  Continued delay would threaten a developer’s ability to realize the tax benefits of the PTC, potentially derailing any hope for construction of a windfarm off the New Jersey coast.

Fishermen’s Energy has petitioned the BPU for approval of its Atlantic City offshore wind project.  This pilot project, which has received all of its New Jersey Department of Environmental Protection (DEP) approvals, will be a 25 megawatt project to be located 2.8 miles from Atlantic City.  In addition, Fishermen’s was recently selected by the US Department of Energy (DOE) to receive up to $4 million to complete the engineering, site evaluation, and planning phase of its project and, upon completion of this phase, the Cape May-based company will be eligible to complete for an additional $47 million in grants for follow-on design, fabrication, and deployment phases to achieve commercial operation by 2017.  In short, Fishermen’s Energy is ready to go.

So the question is: why can’t the BPU establish a pilot OREC program for this particular project, which is vastly smaller in size than any of the three other proposed windfarms off the shores of New Jersey? 

While interested parties continue to debate the overall net economic benefits to ratepayers for these offshore wind projects, what seems to be missing from the conversation is the common sense analysis of (i) the game-changing long term economic and social advantages that a “first of its kind” industry such as offshore wind could have on the New Jersey economy; and (ii) the outrage that all of us New Jerseyans would share if those jobs and benefits were diverted to a state such as Maryland.  Offshore wind will happen here on the East Coast, the question is who will lead the charge?

On the very date of the publication of this blog, the Telecommunications and Utilities Committee of the New Jersey Assembly has proposed an amendment to bill A-1384 in order to reclassify Fishermen’s project as a pilot project, a designation that Fishermen’s has received from the DEP, but which (as of the date of this blog) has no relevance to the BPU and its implementation of the rules governing the OREC funding mechanism.  While it is too early to predict the likelihood of success of this amendment, what is clear is that certain key members of the Legislature, including the amendment’s sponsor Upendra Chivukula (D-Somerset), are equally as anxious Fishermen’s and the general public to keep things moving in the right direction.

Developing 25MW of wind will not provide Fishermen’s with an unfair competitive advantage.  If anything, learning from Fishermen’s and the OREC Legislation’s inevitable shortcomings will provide the other major offshore wind developers with the opportunity to solidify financing structures and calculate pricing models.  It will also allow for ratepayers to see, first hand, how offshore wind will impact their monthly electricity bills.  Establishing a quick pilot OREC program for Fishermen’s makes logical sense, and this is good business for New Jersey.

Yes, the OREC program should certainly be very well thought out, discussed and debated. However, as we see with any innovative legislation, mostly notably New Jersey’s Solar Act (which recently was amended to address some unintended statutory consequences), it is nearly impossible for the BPU to get this 100% right the first time.  Thus, let Fishermen’s “test the waters” and lead us out of the channel slowly.

Climate Change | Wind Energy

NJ Governor Signs Offshore Wind Measure Into Law

August 19, 2010 11:47

New Jersey Gov. Chris Christie signed into law the Offshore Wind Economic Development Act Thursday, thereby endorsing an initiative designed to spur economic growth through the development of renewable energy and green jobs.

Just as NJ has been a leader in providing substantial market-based economic support for solar energy through a rigorous solar renewable energy certificate, this new legislation is intended to establish an offshore wind renewable energy certificate program (OREC) to provide market support for wind energy.  The measure also provides offshore wind developers with financial assistance and can be combined with tax credits from existing programs for businesses that construct manufacturing, assemblage and provide water access facilities to support the development of qualified offshore wind projects.

“The Offshore Wind Economic Development Act will provide New Jersey with an opportunity to leverage our vast resources and innovative technologies to allow businesses to engage in new and emerging sectors of the energy industry,” Christie said in a prepared statement. “Developing New Jersey’s renewable energy resources and industry is critical to our state’s manufacturing and technology future.

The bill directs the New Jersey Board of Public Utilities (BPU) to develop an offshore renewable energy certificate program and, by requiring that a percentage of electricity sold in the state to be generated from offshore wind energy, creates an offshore wind “carve out,” or subdivision within the existing renewable portfolio standard in NJ similar to the solar program.

The offshore wind carve-out is intended to support at least 1,100 megawatts of generation from “qualified” offshore wind projects, which are defined to include projects developed in the Atlantic Ocean and which are connected to the electric transmission system in New Jersey.

Through the legislation, the New Jersey Economic Development Authority (EDA) will provide financial assistance to qualified offshore wind projects and associated equipment manufacturers and assembling facilities.

The signing of the Offshore Wind bill is not the first time Christie has expressed support in recent months for offshore wind development.  In June, he signed a memorandum of understanding with nine other East Coast governors establishing the Atlantic Offshore Wind Energy Consortium to facilitate federal-state cooperation for commercial wind development on the Outer Continental Shelf off of the Atlantic coast.

Climate Change | Solar Energy | Weather

NJ Proposes Net Metering Rule Change, Expanding On-Site DG

January 11, 2010 07:44

By Shawn Smith

McCarter & English, Hartford Office

The New Jersey Board of Public Utilities (BPU) recently proposed an amendment to its net metering rule that will create an even greater economic incentive for utility customers to develop on-site renewable energy, especially solar energy systems.

 

The proposed amendment would eliminate the 2 megawatt (MW) limit on the size of renewable energy systems eligible for net metering, which would lift an obstacle for large-scale solar projects.  This gives customers the opportunity to develop larger renewable energy systems to generate renewable energy and offset their electric bills.  By developing new systems or expanding upon existing ones, customers can take advantage of the economic and environmental benefits of net metering.

 

The net metering rules allow customers which generate on-site electricity using Class I renewable energy sources, such as solar, to connect with the local electric distribution company (EDC) and generate electricity on the customer’s side of (or “behind”) the meter.  The net meter virtually “spins both ways,” meaning that the EDC will either charge the customer for electricity supplied in excess of that generated on site by the renewable project, or credit the customer for purchases resulting from excess energy generated by the renewable energy source.  Under the existing net metering rules, a renewable energy system cannot (1) generate more than 2 MW of electricity, or (2) exceed the annual amount of “electricity supplied by the electric power supplier or basic generation service provider to the customer.”  The 2 MW restriction created a ceiling that limited the ability for larger commercial customers to take advantage of net metering.

 

By proposing to lift the ceiling, the BPU is inviting customers (or third-party developers using power purchase agreements, for example) to invest in larger renewable energy systems that generate more than 2 MW of electricity.  Such a policy shift helps the state to achieve its ambitious objectives set forth in the Energy Master Plan of  achieving 22.5% of renewables, including a renewable portfolio standard target of 2.12% of all energy sold in NJ coming from solar generation.

 

Despite arguments from some owners of large warehouses and developers seeking to build utility-scale solar projects on vacant property sites, the BPU rejected calls to revise the second net metering condition, which requires that a renewable energy system’s generating capacity be equal to or less than the average amount of electricity consumed by that customer on site either from that supplied annually by an electric power supplier or the EDC in the form of basic generation service.  Nevertheless, the potential economic payoff for customers investing in renewable energy projects is clear--the larger the renewable energy system, the lower their electric bill.

 

When the net metering rule is combined with other New Jersey regulatory incentives that promote solar projects, especially as the available federal investment tax credits and accelerated depreciation credits provide enhanced opportunities to support solar projects, the solar industry is expected to continue to focus its business development efforts on NJ and larger-scale sites can expect the solar industry to come knocking. 

 

The proposed amendment provides a particularly significant opportunity for commercial customers to develop or expand upon solar energy systems to take advantage of the substantial market incentives for solar that exist in New Jersey.  New Jersey has encouraged the development of solar energy through its Energy Master Plan (EMP) and the market for Solar Renewable Energy Certificates (SRECs). New Jersey’s solar market, which is the second-largest in the United States (second only to California), continues to grow as a result of these efforts. 

 

The BPU is soliciting comments on the proposed amendment to the net metering rule through March 5.  Anyone interested in submitting comments is free to do so.

 

Another notable proposal of the BPU concerns New Jersey’s “Prevailing Wage Law,” which requires the BPU to adopt regulations to ensure that the prevailing wage rate be paid to workers “employed in the performance of certain contracts for construction undertaken in connection with board [BPU] financial assistance.”  Renewable energy projects constructed with BPU’s financial assistance will soon be subject to the prevailing wage requirements if the BPU proposal is adopted.  The BPU is soliciting comments on the prevailing wage law through March 5.  Anyone interested in submitting comments is free to do so.

 

Finally, in yet another effort to expand renewables, the BPU opened the door for renewable energy projects located outside of New Jersey, other than solar, to qualify for New Jersey RECs.  Previously, only on-site renewable energy facilities directly connected to a New Jersey EDC’s distribution system could qualify for RECs.  Now, pursuant to the new regulation adopted recently, the BPU is allowing qualifying renewable projects located outside of New Jersey, except solar, to obtain New Jersey RECs provided these projects are connected to the PJM Interconnection, L.L.C.’s (PJM) generator information system for tracking renewable energy.  PJM is a non-profit regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia, including Pennsylvania, New Jersey and Maryland.

Climate Change | Legislation | Renewable Energy | Solar Energy


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