Denmark’s Ørsted won New Jersey’s first offshore wind solicitation with a 1.1-gigawatt project known as Ocean Wind, the largest offshore wind project to secure a development deal in the U.S. to date.
Ocean Wind will be built 15 miles from the Atlantic City coast, with construction expected to begin in the early 2020s and finish in 2024.
The New Jersey Board of Public Utilities said that Ørsted will receive offshore renewable energy credits (ORECs) worth $98.10 per megawatt-hour in the project’s first year of operation, lifting the average residential customer’s monthly bill by $1.46. The project will generate enough renewable power for the equivalent of half a million homes.
Using a metric called the levelized net OREC cost — which accounts for energy and capacity revenues being refunded to ratepayers — the project is estimated at $46.46 per megawatt-hour, according to the BPU.
Three development groups bid into New Jersey’s solicitation: Norway’s Equinor; Atlantic Shores Offshore Wind, a joint venture of EDF Renewable Energy and Shell New Energies; and Ørsted, whose footprint in the emerging U.S. market grew dramatically after its acquisition last year of Deepwater Wind.
Ørsted is the world’s largest developer and operator of offshore wind projects, active in Europe, Asia and the U.S.
Ocean Wind is also backed by PSEG, the New Jersey utility group, which will provide energy management services and potentially lease land for onshore pieces of the project. PSEG has an option to become an equity investor.
New York, which has its own 800-megawatt offshore wind solicitation underway, was expected by many in the industry to announce its winners before New Jersey. But in the end the Garden State was the first out of the gate.
Both New Jersey and New York rushed their first solicitations to allow the winning developers to take advantage of the federal investment tax credit before it phases out, helping to lower the cost to ratepayers.
New Jersey has a 3.5-gigawatt offshore wind target for 2030, while New York has recently upped its target to 9 gigawatts by 2035. The two states are competing intensely for future offshore wind jobs and investment, alongside others in New England and the Mid-Atlantic region.
New Jersey is expected to launch two more solicitations, for 1.2 gigawatts each, in 2020 and 2022.
New Jersey’s BPU said Ørsted won on the basis of having the most detailed plans for economic development in the state, including the strongest guarantees around local content and manufacturing. Among other commitments, Ørsted plans to open an operations and maintenance base for the project in Atlantic City.
“Today’s historic announcement will revolutionize the offshore wind industry here in New Jersey and along the entire East Coast,” Governor Phil Murphy said in a statement.
Source: Greentech Media