Elusive offshore wind pilot moves closer to go/no-go decision 

By the end of June, the state may decide if an offshore wind farm will be built about three miles from Atlantic City’s beaches.

In an order signed last Thursday, the New Jersey Board of Utilities established a procedural schedule, saying it expects to take action on the proposal by June 30 – an application that has been pending before the regulatory agency since May 2011.

The Fishermen’s Atlantic City wind farm is the first of several proposals to locate offshore wind turbines along the Jersey coast. Unlike the others, however, the project is designed to serve as a pilot to demonstrate the feasibility of harnessing offshore wind to produce cleaner energy for homes and businesses.

If the pilot proves practicable, Fishermen’s Energy plans to build a utility-scale project in federal waters that will generate approximately 330 megawatts. The first hurdle – getting the go-ahead on the pilot – may be the most difficult.

Representatives from Fishermen’s Energy did not respond to a call or e-mail asking for comment. In the past, its executives have said that every country that has developed large-scale offshore wind farms began by first building small pilots.

The state has established aggressive targets to develop an offshore-wind sector in New Jersey, a goal it believes could foster well-paying jobs by manufacturing the various components needed to build and implement wind turbines – from blades and cables to specialized construction equipment. By 2020, New Jersey is supposed to have 1,100 megawatts of offshore wind capacity, a target most observers say will be virtually impossible to achieve.

So far, the Atlantic City pilot project, calling for a 25-megawatt wind farm in state coastal waters, has met a skeptical reception from the BPU and New Jersey Division of Rate Counsel. Each has retained separate consultants to evaluate the project and both have said the proposal fails to provide the critical economic benefits to win approval from regulators. Under an offshore-wind law, a project cannot be approved by the BPU unless it demonstrates a net positive economic impact for the state.

With all of the offshore wind projects hinging on still-unknown ratepayer subsidies to make them viable, even some project developers say that target will be hard to hit, unless some big manufacturers in the offshore-wind industry locate in New Jersey.

The negative recommendations from the state-retained consultants have galvanized lawmakers who back offshore wind to introduce two bills urging the BPU to approve pilot projects – specifically, the Atlantic City proposal. They argue that the state should promote a pilot before approving 1,100 megawatts of offshore capacity.

“When you are looking at the economic benefits issue, you need to look at pilot projects differently,’’ said Assemblyman Upendra Chivukula (D-Somerset), the sponsor of the bill (A-3927) in the Assembly. Senate President Steve Sweeny (D-Gloucester) is sponsoring an identical bill the Senate.

Chivukula said he expects the Legislature to take action on the bills prior to the budget break at the end of June.

Whether that makes any difference in the efforts to promote offshore wind remains uncertain.

The state is still struggling to create a financing mechanism that would ensure that the electricity offshore wind farms produce will not be diverted from the developers who build the projects. The state retained another consultant to come up with a proposal to guarantee that would not happen, but it was greeted skeptically, at best, by developers.