Thousands upon thousands of turbine blades churning away in the wind.
Thousands upon thousands of solar panels soaking up the sun.
Electricity flowing inexhaustibly.
Well, maybe hold off on “cheap” for right now. Turns out that’s being debated.
Nevertheless, New Jersey’s going all in on “renewable” energy. Solar and wind.
Two powerful forces are behind the state’s push for “green” electricity: Public Service Electric & Gas (PSE&G), the state’s biggest utility. And Chris Christie, governor.
The push for solar and wind is a win, win, win, they say.
A win for the environment. A win for energy independence. A win for consumers.
Maybe the first two, maybe not so much the third, says New Jersey’s Division of Rate Counsel.
The division is the government agency that scrutinizes rate hikes and other proposals that regulated utilities put before the five-member Board of Public Utilities (BPU). The Rate Counsel represents consumers before that agency.
Right now the Rate Counsel is casting a skeptical eye on Public Service’s “Energy 4 All” initiative. It’s an ambitious plan to install arrays of solar panels on landfills, abandoned industrial properties and warehouse rooftops. Public Service says the plan fits Gov. Christie’s energy policy of exploiting unused property to develop renewable energy. It’s a wise investment in New Jersey’s economic future, Public Service says.
While not opposing the initiative itself, the Rate Counsel raises questions about its financing – especially the outsize share it says Public Service wants to allocate to consumers’ monthly electric bills.
Meanwhile, the Rate Counsel also is raising questions about the economic viability of a proposal to test an electric-turbine “wind farm” 3.5 miles off Atlantic City’s shoreline. Fishermen’s Energy Atlantic City has teamed up on the proposal with China-based XMEC, which manufactures wind turbines.
As for the solar push, Public Service says its investment plan would add only about $12 a year to average electric bills. This would affordable help put Public Service in sync with the state’s long-term renewable energy goals, according to the utility.
But NJSpotlight, an online news service run by veteran New Jersey journalists who cover state energy issues in depth, offers another perspective on the $12 a year: Over the term of the project, a period extending through 2017, $12 a year comes to some $900 million out of consumers’ household finances.
Rate Counsel director Stephanie Brand points to a proliferation of utilities’ “ratepayer surcharge mechanisms” across the nation. The Rate Counsel cites 15 such surcharges already tucked away in New Jersey’s electric bills.
New Jersey has the sixth most costly electric rates in America, a standing that impedes economic development. New Jersey’s average retail rates are $14.68 cents per kilowatt-hour, compared to neighboring Pennsylvania’s $10.31 and Delaware’s $11.97, according to the U.S. Energy Information Administration.
Solar and wind energy generally are far more expensive than energy generated by gas or coal. Though expanding rapidly, pushed by government tax credits and grants, renewable energy provides only 13 percent of energy demands nationally. Wind provides 23 percent of that share, solar about 1 percent.
The Rate Counsel’s Paul Flanagan argued before the BPU that consumers shouldn’t “be used to facilitate” New Jersey’s solar investments. Public Service should make such investments through its own alternative-energy subsidiaries, out of its own pockets, not the consumers,’ he said.
A consultant for the Rate Counsel also has indicated concerns about the stagnant status of solar economics right now. Should optimistic cost-recovery projections not pan out for Public Service, said the Rate Counsel, it would be “ratepayers, not shareholders, that would bear 100 percent of any variations from estimates,” the consultant, Columbia Group of Ridgefield, Conn., said in a filing with the BPU.
An observation by one solar industry executive reported in NJSpotlight does not make the solar market’s current economic prospects sound encouraging. Alan Bucknam, CEO of SunDurance Energy – a business partner with Public Service on a Hackensack Meadowlands solar project – was quoted as saying that due to risks: “Frankly, private investors will not invest in projects like this.”
The Rate Counsel voiced one other concern: It’s all but impossible to separate solar costs from regular electricity-generation costs and confirm the expenses Public Service proposes to allocate to consumer surcharges.
Meanwhile, though, Christie boasts of the “incredible achievement” of 1 gigawatt (1 billion watts) of already-installed solar energy in the state through more than 20,300 solar projects. These include ones visible atop parking ramps and street lights in Trenton. New Jersey solar capacity has skyrocketed sevenfold since he took office, the governor says.
Skeptical questions also have been placed before the BPU regarding the proposed off-shore wind farm. Fishermen’s Energy Atlantic City says its project with China’s XMEC could deliver $250 million of “economic benefits” to the state, including 200 turbine assembly jobs XMEC says it would locate in the state.
But Acadian Consultants Group, retained by the Rate Counsel, cites “considerable uncertainty” about the volatility of the Chinese firm’s share prices and its lack of experience with the type of “direct-drive” turbines proposed for the Atlantic City project.
Also, a major study of offshore wind turbines off the coasts of England and Denmark, under the direction of Edinburgh University Prof. Cordon Hughes, former energy advisor to the World Bank, concluded that offshore turbines last only 12 years, not the 25 years previously projected. If the study’s finding are valid, electricity delivered via offshore wind may prove to be significantly more expensive and less efficient than once hoped.
Despite such concerns, though, the push is on in the state legislature for public investment in electricity generated by offshore wind turbines. Pending legislation would renew and extend $100 million of tax credits for such projects under the Offshore Wind Development Act, signed into law in 2010 by Gov. Christie.
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