A consulting firm hired by state officials to review an Atlantic City offshore wind farm proposal strongly recommended state regulators reject the proposal, saying the electricity capacity created at $11,237 per kilowatt-hour would be the most expensive offshore wind power in the world.

The report by David E. Dismukes, associate director of Louisiana State University’s Center for Energy Studies and consultant with Acadian Consulting Group, warned that the proposal by Fishermen’s Energy would lead to the state losing $946.1 million in economic activity over the 20-year contract. 

This would include losing 29,661 jobs, while boosting electrical rates by $286 million in a state that already has one of the highest energy costs in the nation. Dismukes based that estimate on his belief that companies would leave the state based on higher energy costs.

State law requires the project provide a net positive benefit.

As a result of the report, Stefanie A. Brand, director of the state Division of Rate Counsel that commissioned the report, said her office would recommend the state Board of Public Utilities veto the project when the agency takes it up later this spring. Her office represents the state’s consumers in front of utilities regulators.

Fishermen’s Energy is seeking BPU approval for Offshore Wind Renewable Energy Certificates, of OREC, which is a way of financing renewable energy projects by guaranteeing state power companies will purchase the electricity. The firm looks to begin construction later this year.

The report also criticized the proposed $310 OREC cost, saying it was 65 percent to 121 percent higher than comparable projects in Massachusetts, Rhode Island and Delaware.

Chris Wissemann, the CEO of Fishermen’s Energy, questioned the report, calling it “humorously misleading.” He said that the findings were rife with basic mistakes.

“This report is just one opinion on this project,” Wissemann said Friday. “But we’re confident that when all opinions are put on the table and all facts are on the table it will be beneficial for New Jersey to pursue.”

He said the report improperly discounted most environmental, economic and other benefits. “What they have constructed is a scenario that doesn’t look at the benefits. They only look at the costs,” Wissemann said. “If you don’t look at the benefits, hardly any project looks good.”

Dismukes said he could not respond the Wissemann’s criticisms for legal reasons.

In the report, Dismukes questioned the choice of technology and the vendors, as well as the financing of the project and its costs.

The Fishermen’s Energy project is a smaller project designed to show off the potential for wind energy in advance of larger projects in federal waters farther off shore. The offshore wind project is on track to be the nation’s first.

The Fishermen’s Energy project would use six five-megawatt turbines 2.8 miles off Atlantic City. A single five-megawatt turbine can produce more than 15 million kilowatt-hours of power, or enough to power more than 1,400 households.

The entire project is limited by law to 25 megawatts, which Wissemann said the firm would comply with.

The project would cost $242.7 million, including what the report said was an anticipated $65.6 million federal renewable energy grant.

It will use turbines provided by Xiangtan Electric Manufacturing Group Ltd. The report questioned the choice of direct drive technology, which simplifies the turbines by eliminating interior gearboxes. 

The report called the technology “untested,” but Wissemann called that inaccurate, saying thousands of direct drive windmills were in operation throughout the world. He said XEMC alone has installed 1,300 similar turbines across Asia, and was “standing behind” this project.

Greenstone Energy, a subsidiary of XEMC New Energy, will take a 70 percent equity stake in the project, the report said. The report said that XEMC New Energy is mostly owned by XEMC Group, a company that is primarily owned by a provincial government agency in China.

The report pointed out that the company has no supply chain in America, even though it planned to develop offshore operations and maintenance facilities, with manufacturing facilities in Paulsboro, Gloucester County.

Consequently, the report said, “If (the project) is approved, 70 percent of the profits of the … project is likely to leave both the U.S. and New Jersey.”

The report further questioned the choice of XEMC Group as a financial partner, noting that its shares have shown greater price volatility than either Siemens or General Electric. Fishermen’s considered but rejected those company’s turbines.

Fishermen’s Energy was also accused of making too-rosy projections for the economic benefits. Even the most conservative estimate reported almost $1.3 billion in benefits, of which 70 percent would come from tourism.

A more reasonable assumption, the report said, would be closer to $67.5 million in benefits, based on 0.5 percent to 3.5 percent growth of current Atlantic City visitorship. Even then, tourism would make up about 33 percent of the value.

Wissemann said this drastically underestimated the tourism value of offshore windmills.

“There will be a tourboat operating daily just to take people out to see them,” he said.

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