New Jersey grants Garden State Offshore Energy to build wind farm off Avalon

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Details of the deal / Q & A

Who is the winning vendor? Garden State Offshore Energy (GSOE), a joint venture between the Public Service Enterprise Group (PSEG) and Deepwater Wind, the company that was recently awarded the development contract for an offshore wind farm for Rhode Island, was chosen by the Board of Public Utilities as the preferred developer for New Jersey’s project. They will receive a $4 million state grant towards the construction. How much electricity will proposed wind farm generate? GSOE’s project would generate 346 megawatts of energy. This amounts to 1.2 million megawatt hours per year, which is enough to power approximately 150,000 average homes in New Jersey each year. How much will it cost to build the windmills and generate that electricity? While it’s a little early to say what the actual project will end up costing, estimates put the total cost of the project at $1.1 billion. This was the number that was presented to the BPU. How much revenue can the winning vendor recover? No one knows for sure. Once the wind farm is up and running, GSOE will have to find a buyer for the power. All of the power will count as renewable energy credits, and since New Jersey has goals of generating 20 percent of its electricity from clean, renewable sources by 2020, companies will most likely look towards projects like this wind farm to meet that goal. When will winning vendor build? There are two phases. The first phase is the assembly of all the equipment, which is scheduled for 2011. Then the turbines get deployed in the water in 2012 and the project should be completed by 2012. Where will winning vendor build? The project will be built 16 to 20 miles off the coast of Atlantic and Cape May Counties. At that distance, the turbines are barely visible. How will the operation work? The project uses “jacket” technology. Normally, offshore wind farms rest on a large steel pole, but this only works in lower depths. Because this wind farm is much farther off the coast, the turbines will rest on a jacket foundation, or a framework that looks like an oil derrick. These four-legged structures can be placed in deeper water and have been used in the oil and gas industries. Each of the 96 turbines generates 3.6 megawatts of electricity. The turbines will all connect to a substation. That substation will be connected to a cable placed under the seabed that brings the energy to the main grid in the Atlantic City area. How does operation fit into context of clean energy initiatives? Solar and offshore wind have some of the highest potentials for generating electricity in with clean and renewable sources. The approximately 350 megawatts generated by GSOE’s project is a little more than a third of the 1,000 megawatt goal that the state wants to set for 2020.

E-mail Ben Leach:

BLeach@pressofac.com

New Jersey grants Garden State Offshore Energy to build wind farm off Avalon

By DEREK HARPER Statehouse Bureau, 609-292-4935

Published: Saturday, October 04, 2008

With project Q&A / NEWARK - Windmills could start sprouting off New Jersey's coast as soon as 2010 after the state Board of Public Utilities signed off on a proposal at its meeting Friday morning.

The board unanimously approved granting $4 million to Garden State Offshore Energy over four competitors to build a wind farm, while strongly hinting this would be just the beginning of the state's foray into wind power.

"This project is one that will keep New Jersey on the cutting edge of renewable energy," BPU Commissioner Joseph L. Fiordaliso said during the meeting.

The company, a joint effort by PSEG Renewable Generation and Deepwater Wind, proposed to generate 345.6 megawatts from 96 wind turbines in a 3.5-by-5.5-mile grid to be built about 20 miles east of Avalon.

The proposal was the farthest offshore of the five projects the board reviewed and would sit in water about 110 feet deep. The $1.07 billion project would connect to the electrical grid through a cable coming ashore in Ocean City and connected to a substation at Beesleys Point.

Why Garden State ranked high

Garden State won the award because it scored highest in the broad categories of technical expertise and the overall cost to the state, said Benjamin Scott Hunter, BPU Clean Energy Program administrator.

It ranked high because of financial stability, it was farthest offshore, its technology lowered costs and it asked for the least amount of money.

The company said the windmills mostly would be assembled on land and then brought to the site on large sea barges to be assembled. The company said it expected to build the turbines in New Jersey and put them to sea in a deep water port either along the Delaware River or northern New Jersey.

It would be built in stages starting in 2010, after the state Department of Environmental Protection wraps up an ecological survey. Half of the windmills would be operational in 2011 and half in 2012.

As for the aesthetic impact, Rosengren said after the meeting that the wind farm will be far enough offshore that "on a clear day it will be half the width of a fingernail."

He said the company didn't plan to offer tours but area fishermen may.

A cleaner alternative

The company estimated the 345.6 megawatts generated could supply the annual needs of about 125,000 homes. By comparison, the B.L. England power plant at Beesley's Point can produce as much as 447 megawatts.

The BPU expected the wind farm would produce energy at market rates. PSEG Renewable Energy spokesman Paul Rosengren said the wind farm would have no net effect on ratepayers bills.

Over the project's expected 25-year lifetime, the company said the wind farm would create power while avoiding pollution including the 15,417 tons of nitrous oxide, 29,893 tons of sulphur dioxide, 11 million tons of carbon dioxide and 349 pounds of mercurythat would be generated by traditional fossil fuel-burning power plants.

The company equated this to planting 2 million trees, taking 1.5 million cars off the road or not burning 16 million barrels of oil per year.

Company confident in financing

Rosengren said the company was confident it could build the $1 billion project, even as credit markets have continued to dry up, because the two companies behind the proposal were financially strong.

Furthermore, he thought there was a chance credit markets could revive during the 18 months of environmental studies and wind analyses before construction. The company hoped to benefit from federal tax breaks and state renewable energy credits.

Environmental groups applauded the board for moving forward with the project.

Jeff Tittel, executive director of Sierra Club's New Jersey branch, said clean energy should factor in future state energy decisions. He said, "We're going to have to decide if we're willing to have windmills or oil wells off of our coast."

Environment New Jersey also supported the decision, said spokesman Matt Elliott.

State sets the bar

The state has moved toward cleaner sources of energy. The state passed a law in 2005 saying 20 percent of the state's electricity needs must be met by renewable sources by 2020.

Friday's decision came a year after the board solicited wind farm proposals. The five proposals were reviewed by a five-person committee that included the Governor's Office, the BPU's Clean Energy office and its office of the Economist and Energy Division, the state DEP and Commerce Commission, and the federal Department of Energy's National Renewable Energy Laboratory.

Other BPU staff and a member of the U.S. Mineral Management Service also attended review meetings.

Company officials said the grant was good, but the stamp of government approval was the best thing about Friday's approval.

Rosengren said backing could help it clear necessary state and federal permitting hurdles, especially with the U.S. Mineral Management Service, which has significant say over where the final placement will be.

Deepwater Chief Operating Officer Chris Wissemann said he anticipated the service would accept applications at some point in the first three months of 2009.

New Jersey not alone

With Friday's announcement, the race is on to determine where the nation's first offshore windmill farm will be built.

On June 23, Delmarva Power approved a 25-year contract with BluewaterWind to build as many as 150 turbines in the Atlantic Ocean, some 11.5 miles east of Rehoboth Beach, Del.

When operational in 2012, BluewaterWind spokesman Jim Lanard said, it could generate as much as 450 megawatts of power.

Deepwater Wind, one of the partners in the winning New Jersey bid, beat out six other competitors on Sept. 25 in a bid to erect a $1.5 billion offshore windmill farm in Rhode Island.

The 100-turbine facility would be 15 to 20 miles off that coast, the Providence Journal reported, and would generate 385 megawatts of power - enough to supply 15 percent of that small state's electricity needs.

E-mail Derek Harper:

DHarper@pressofac.com