Ocean County Leader

At a recent field hearing in Brigantine, Congressmen Jeff Van Drew (D-2) and Chris Smith (D4) led a discussion on the implications of the proposed offshore wind programs. They were joined by PA Congressman Scott Perry (PA-10) and a panel of experts to provide their viewpoints to New Jersey residents about the potential impact of these initiatives. This article, part of the TAPinto Gold Coast offshore wind energy series, focuses on the possible financial effects offshore wind energy may have on households and businesses statewide.

To clarify the funding basis and the New Jersey Board of Public Utility's (NJBPU) role in offshore wind development, former NJBPU President and Commissioner Joanne Solomon explained: "The NJBPU is tasked with ensuring safe, reliable utility service at reasonable rates. Essentially, the Board functions as an economic regulator. While they don’t set policy on energy sources, they are required to implement legislative directives. The legislation authorizing offshore wind development mandates that there must be a net benefit to ratepayers—encompassing reliability, safety, environmental attributes, and economic development. In short, the benefits must outweigh the costs. However, the proposals received for offshore wind are significantly more expensive than conventional energy resources."

Concerns about the economic viability of offshore wind projects came to the forefront when Orsted, the developer, canceled the first two New Jersey offshore wind projects citing a "lack of economic viability," according to Orsted's CEO.

Financial Impact to NJ Taxpayers

Independent energy expert Ed O'Donnell of Whitestrand Consulting LLC who has studied, written, and testified about Offshore Wind Energy told TAPinto Gold Coast "Offshore Wind is not economically viable without major subsidies in the form of Federal Tax credits and guaranteed above market utility prices for power generated." There are four main components of costs: 1) NJ Electric Power generated (i.e., rate payers), 2) NJ transmission ratepayers 3) Federal subsidies (i.e., US taxpayers throughout the country), 4) and as O'Donnell said "a major element that has not been factored into NJ's cost/benefits analysis - the massive rebuild of the power grid, which in its current state is not built to handle this new power."

Power generation costs: O'Donnell's analysis shows that the gap between subsidized offshore wind power prices and market prices is expected to grow from $42/MWh (4.2 cents/kWh) in 2030 to $144/MWh (14.4 cents/kWh) by 2047—a 243% increase as more offshore wind energy is added to the grid. The NJBPU has been instructed to award above-market Offshore Renewable Energy Credits (ORECs) to attract offshore wind producers. The NJ Rate Counsel has also raised concerns about rising costs urging lawmakers to reconsider or slow down expansion as "ratepayers simply cannot afford drastically higher electric bills.’’ Director Lipman added, "Rate Counsel is closely watching ongoing offshore wind proceedings and remains concerned about costs faced by ratepayers."

According to Whitestrand Consulting LLC’s analysis from 2030 through 2047 depicts a significant gap between market rates and new wind rates at $141/MWH or almost three times market expense.

Transmission Costs: Analysis by O'Donnell shows added offshore wind costs progressively increasing energy rates.

In 2022, average New Jersey residential customers paid 16.4 cents/kwh for electricity—20% higher than national average according to US Energy Information Administration—with projections rising up to 32 cents/kwh by 2047 or double current rates amounting over $1,000/year per average residential customer.

For commercial ratepayers rates could rise nearly $8,300 per year by 2047 ($95,000 over period). For industrial companies annual increases could exceed $70K resulting in $796K over same period.

Federal Subsidies: Currently covered by usage-based power generation transmission rates & maintenance but federal subsidies attract large global oil corporations for projects otherwise non-viable without such aid implying U.S taxpayers would fund electric utility expenses for coastal states like New Jersey.

Solomon noted one developer withdrew due insufficient state subsidies despite continued solicitations driving up overall project costs with each round prompting O'Donnell’s critique against persistent bid solicitations until profitability met.

TAPinto Gold Coast sought comment from NJBPU but did not receive response by press time; updates will follow upon receipt.

O'Donnell highlighted necessary upgrades needed for current incompatible grid requiring major investments acknowledged within State's Energy Master Plan overseen via periodic solicitations planning expansions supporting renewable/offshore programs.

In May Mark Mills collaborated with Garden State Initiative analyzing goals/challenges within EMP deeming it aspirational estimating implementation cost at $40 billion potentially driving out people/jobs remarked Audrey Lane GSI.

Congressman Van Drew criticized administration pushing forward irrespective high cost subsidizing foreign-controlled industry risking dependency influencing utility rates/federal tax dollars toward their projects.

This article was originally published on August 18, 2024 by TAPInto Gold Coast which serves Spring Lake Spring Lake Heights Sea Girt Manasquan Brielle found online athttps://www.tapinto.net/towns/gold-coast/sections/government/articles/the-high-cost-of-offshore-wind-what-nj-residents-businesses-need-to-know.