Wind turbines seven miles off South Jersey’s coast got a step closer to reality Monday after two companies won a federal auction to lease a combined 344,000 acres for possible wind power development.
RES Americas Developments Inc. bid $881,000 to lease 160,480 acres. US Wind Inc. bid about $1 million for 183,353 acres, the U.S. Bureau of Ocean Energy Management said.
Cape May-based Fishermen’s Energy was the only other company to take part among 13 potential bidders.
The New Jersey auction was the fifth in the U.S. as the Obama administration tries to boost offshore wind in federal waters.
But there remain questions on how close the state really is to getting some of its power from windmills deep in the ocean.
Industry experts and environmentalists say many projects may not see steel in the water without state subsidies – likely tacked on to electricity bills – to offset massive construction and infrastructure costs.
“Even with this auction, the wind companies will have a hard time being able to develop their wind farms, because New Jersey hasn’t put the rules in place for financing offshore projects,” said Jeff Tittel, director of the New Jersey Sierra Club.
The state’s 2010 Offshore Wind Economic Development Act said it would establish an offshore wind energy certificate program to support at least 1,100 megawatts of wind from qualified projects.
That has not yet happened.
State Board of Public Utilities spokesman Greg Reinert said the board recently put out a request for a consultant on how to develop a credit for wind power.
U.S. Wind, an Italian renewable energy developer controlled by Renexia, last year won a similar federal auction for about 80,000 acres offshore Maryland. Last year, the company said it planned to build the farm by 2019.
In South Jersey, one lease site runs offshore from southern Cape May County to Atlantic County. A second stretches from Atlantic County to Ocean County.
Tracey Moriarty, spokeswoman for the Bureau of Ocean Energy Management, said the winning bids require a Department of Justice anti-trust review, which can take 30 days.
Then the companies have one year to submit a site assessment plan on how they will survey the oceanic conditions, seabed and marine life in the area.
If approved, they will have as long as 4½ years to submit a construction and operations plan that will detail the number of turbines, their heights, and other issues, she said.
There will be an environmental review and public comment as part of that review process.
Companies can operate windfarms for 25 years.
The sites off South Jersey can bring as much as 3,400 megawatts of electricity, which is enough to power 1.2 million homes, the federal government said.
The federal agency said a project that size could entice a turbine manufacturer or foundation supplier to manufacture in New Jersey.
Although federal auctions have brought leases, they have not yet produced offshore energy.
In July, construction started on the nation’s first offshore windfarm, the 30-megawatt, 5-turbine Deepwater in state waters off Rhode Island.
That plant will provide electricity to Block Island, which is 13 miles off Rhode Island’s coast and is powered predominantly with diesel generators.
James Manwell, professor and director of the Wind Energy Center at the University of Massachusetts, said offshore wind is going to be expensive, especially in the early stages.
“Part of that has to do with the infrastructure you need to get everything moving. Especially in the East Coast that has to be all put in place,” Manwell said.
Political and climate change debate may also play a role in their future, he said.
“Climate change – I think most people think it’s real and it’s going to have a major impact. People will either begin to do something about it or let the water rise. If they do something about it, offshore wind is one of the few things that have the potential to offset a lot of CO2,” Manwell said.
Jeremy Firestone is professor at the University of Delaware’s College of Earth, Ocean and Environment and director of the Center for Carbon-free Power Integration.
Firestone said how prevalent offshore wind energy becomes may depend on fossil fuel prices, he said.
“Long term if the prices don’t come down and the price of fossil fuels stays low, we won’t build many of these. But if we put a price on carbon emissions, and if the price comes down significantly for offshore wind power we’ll see a lot of them built,” Firestone said.
Fishermen’s Energy sought a federal lease site on Monday sites but lost
The company failed in several attempts over the years to build an experimental 25-megawatt wind farm 2.8 miles off Atlantic City in state waters. However, the Board of Public Utilities rejected it based on concerns that power would be too costly.
Fishermen’s Chief Operating Officer Paul Gallagher said the company maintains its commitment to build it.
A bill released Monday by the state Assembly Telecommunications and Utilities Committee urged the BPU to promote offshore wind energy off Atlantic City.
“It’s pretty clear this industry is coming to New Jersey and I think it’s time we get started,” Gallagher said. “And Fishermen’s Energy is ready to start over.”