New Jersey’s Board of Public Utilities has published a proposed financing structure that may allow developers to build offshore wind without fear of the state government siphoning off vital revenue.
Consultancy Boston Pacific Company examined on behalf of the board possible funding mechanisms for offshore renewable energy credits (ORECs), the means by which utilities will pay offshore wind operators for the electricity they generate. There are concerns that if these monies go through a state agency such as the BPU, legislators may be able to divert the funds for other purposes.
Boston Pacific has proposed what it calls the “invoicing option". Under this system, electricity market operator PJM would issue ORECs to developers. Electricity suppliers – including generation service providers and third-party retailers – would buy ORECs from the developers. A new OREC administrator would determine what each supplier must pay, according to its share of New Jersey electricity supply.
This direct payment gives the system a “high level of protection” against state clawbacks, Boston Pacific said. Developers would then sell their projects’ energy, capacity and ancillary services in PJM markets, with all revenue going to New Jersey’s four electric distribution companies.
Rhonda Jackson, communications director at Fishermen’s Energy, said the developer is “encouraged” by Boston Pacific’s proposal. “It is important to this newly developing industry, that a funding mechanism to ensure that revenue from the electricity produced by the offshore wind projects is not diverted by state appropriation of funds,” she said.
Fishermen’s 25MW Atlantic City project is the furthest advanced of the state’s offshore wind power proposals. It received a construction permit from the US Army Corps of Engineers and last December was awarded a $4 million Department of Energy grant, but has yet to gain BPU approval for its OREC pricing proposal.
The developer hopes to start onshore construction this year.