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Feds say New Jersey offshore wind leases to go up for sale starting in November

The federal government yesterday announced plans to offer leases this November for wind farms off the coast of New Jersey, removing a key impediment holding up the development of wind generation offshore.

The sale of the leases will open up 343,833 acres beginning seven nautical miles off the coast to serve as potential sites for wind farms – a technology goal long backed by legislators, clean-energy advocates, and the Christie administration (although some question its commitment).

Even with the lease sale, however, another more intractable barrier remains –figuring out how to pay for the electricity the wind turbines produce. The state Board of Public Utilities has yet to develop a financing mechanism to do so. Without it, is highly unlikely any offshore wind farms will ever be built.

The agency was supposed to adopt rules detailing the financing, requiring utility customers to pay for the power, by March 2011. This summer, BPU President Richard Mroz said the agency planned to hire a consultant to write the regulations.

Offshore wind advocates said the federal agency’s announcement puts the onus on the BPU to get the job done.

“It puts a lot more heat on BPU to stop stalling and actually [write] the rules required under the legislation,’’ said Doug O’Malley, director of Environment New Jersey, referring to the Offshore Wind Economic Development Act (OWEDA).

Chris Wissermann, CEO of Fishermen’s Energy, one of the 13 offshore wind developers expected to participate in the lease sale, agreed.

“This clearly removes the last excuse for BPU regarding the final implementation of OWEDA,’’ Wissermann said. The BPU repeatedly rejected Fishermen’s Energy’s bid to develop a small offshore wind farm, which it dubbed a pilot project, three miles off of Atlantic City.

The BPU said it worked with the federal agency BOEM (Bureau of Ocean Energy Management) and provided input on the lease sale.

“This administration continues to support the development of sustainable, clean offshore wind energy production in a manner that is economically sound and that protects our ratepayers from exposure,’’ said Greg Reinert, a spokesman for BPU.

The potential cost of developing offshore wind led some, including business interests, to question why the state is proposing to support the technology – especially in a state with already steep energy costs. In rejecting the Fishermen’s Energy pilot, the agency cited its high cost to ratepayers.

“These energy sources are inefficient and expensive,’’ said Mike Proto, a spokesman for Americans For Prosperity, a conservative organization highly critical of the technology.

Nevertheless, the state Energy Master Plan calls for 1,100 megawatts of offshore wind to be developed by 2020, a goal not likely to be achieved. By hiring a consultant to come up with a financing scheme, it could be one or two years before the regulations are adopted, according to Jeff Tittel, director of the New Jersey Sierra Club.

“As long as the governor is running for president, New Jersey is not going to do offshore wind,’’ Tittel said.

In announcing the New Jersey lease sale, the federal agency said the area could support at least 3,400 megawatts of commercial wind generation, enough to power an estimated 1.2 million homes. Offshore wind is viewed by the Obama administration as an important component of its efforts to deal with climate change and reduce greenhouse-gas emissions.

So far, the Bureau of Ocean Energy Management has awarded nine commercial offshore wind leases in waters off Rhode Island, Massachusetts, Maryland, and Virginia. The lease sales have generated about $14.5 million in winning bids for more than 700,000 acres in federal waters.

In July, Rhode Island began building a $225 million, 30-megawatt offshore wind project being developed by Deepwater Wind.