Subscriber Login

Features

New Jersey’s OSW Targets: Drafts 2.4 GW capacity second solicitation [free access]

August 13, 2020

The state of New Jersey, located in the heart of the East Coast wind belt, has set itself on a path of benefiting from its geographical position and being at the forefront of developing offshore wind (OSW) energy to address climate change. The state aims to have enough offshore wind turbines to power over 3.2 million homes and meet 50 per cent of its electricity needs by 2035.

 

Offshore wind is the linchpin to achieve the state’s ambitious clean energy goals. In November 2019, Governor Phil Murphy signed Executive Order No. 92, with the announcement of the state’s offshore wind capacity target of 3,500 MW by 2030 and 7,500 MW by 2035 to help meet its goals of 50 per cent renewable energy by 2030 and a 100 per cent carbon neutrality by 2050.

 

The state has developed a roadmap for achieving 7,500 MW of offshore wind capacity in the next 15 years. Its draft Offshore Wind Strategic Plan (OWSP) released in early July 2020 focuses on various priorities that the state intends to follow to build a robust offshore wind industry while protecting its natural and environmental resources, as well as commercial and recreational fishing.

 

In addition to this, the New Jersey Board of Public Utilities (NJBPU) on July 22, 2020, issued a draft Solicitation Guidance document for its second offshore wind solicitation. The document includes information on the timeline and mechanisms of the second solicitation, the application requirements, and the criteria for evaluating applications.

 

The State’s offshore wind industry

Recently, the US East Coast, which is one of the most promising regions for offshore wind, has witnessed a range of activities in the sector. The East Coast offshore wind industry grew from 30 MW of installed offshore wind capacity in 2018 to a pipeline of over 35 GW to be realised by 2035. Several factors such as individual state offshore wind initiatives, together with federal government action to designate East Coast areas for offshore wind generation, have shaped a bright future for the industry. In addition to New Jersey’s commitment to 7,500 MW by 2035, the nearby states of Maryland and New York have committed 1,200 MW and 9,000 MW of offshore wind energy, accounting for approximately 50 per cent of the East Coast market.

 

Figure 1: Share of East Coast market

  

Notes: NJ­–New Jersey; ME–Maine; NH–New Hampshire; MA–Massachusetts; RD–Rhode Island; CT–Connecticut; NY–New York; DE–Delaware; MD–Maryland; VA–Virginia; and NC–North Carolina

Source: Offshore Wind Strategic Plan (OWSP); Global Transmission Research

 

The federal government, led by the Bureau of Ocean Energy Management (BOEM), is tasked with identifying, leasing and reviewing offshore wind areas and projects located between three and 200 nautical miles from the US coast. BOEM identifies wind energy areas (WEAs) in federal waters that are most suited for offshore wind development. Post the designation of the WEAs, BOEM conducts further reviews and identifies smaller sections within the WEAs as lease areas to be developed as offshore wind farms. These lease areas are auctioned by BOEM to offshore wind developers who bid for the opportunity to plan, construct and operate offshore wind projects. States and other stakeholders work with developers and federal agencies to plan and approve the development of specific wind farms.

 

Figure 2: Areas for potential wind development and/or leases along the East Coast

Source: Bureau of Ocean Energy Management (BOEM); Offshore Wind Strategic Plan (OWSP); Global Transmission Research

 

There are currently 17 BOEM-designated offshore wind lease areas along the East Coast, six of which are located off the New Jersey coast. In addition to these, BOEM is currently evaluating several WEAs as potential offshore wind lease areas along the East Coast.

 

That said, in this nascent industry, the states play a crucial role in the offshore wind project review process. The New Jersey Department of Environmental Protection (NJDEP) is the lead agency for the state permitting process and has regulatory oversight over offshore wind energy transmission cables and infrastructure built in the state’s water territories, as well as onshore activities. NJDEP is designated as a cooperating agency for the federal environmental review process and can make recommendations for measures to minimise and mitigate potential natural resource impacts.

 

New Jersey, along with other states, solicits the purchase of offshore wind energy in the form of electricity generated by a proposed project over a specified timeframe. The New Jersey Board of Public Utilities (NJBPU) is tasked with soliciting bids for offshore wind generation projects, evaluating the received proposals, and awarding subsidies [offshore wind renewable energy certificates (ORECs)] to winning bidders.

 

Figure 3: Solicitation structures for offshore wind transmission

Note: The figure represents an estimated timeframe for each step. Reviews for each project may vary depending on individual circumstances; BOEM–Bureau of Ocean Energy Management; COP–construction operation plan; SAP–site assessment plan

Source: New Jersey offshore wind strategic plan; Global Transmission Research

 

On January 22, 2020, the governor of New Jersey signed Bill S-3985/A-566 Energy Competition Act to add the definition of an open access offshore wind transmission facility and revise the law concerning qualified offshore wind projects.

 

The amendment requires developers seeking NJBPU approval for qualified offshore wind projects to include in the project description details on transmission facilities and interconnection facilities to be installed. Significantly, the legislation allows the NJBPU to conduct one or more competitive solicitations for open-access offshore wind transmission facilities designed to expedite the collection or delivery of offshore wind energy from qualified projects to the onshore transmission system. This amendment also expands the definition of an offshore wind renewable energy certificate (OREC) to include the environmental attributes equivalent to 1 MW of electric transmission transfer capability from a qualified offshore wind project.

 

Other than this, onshore substation upgrades and connections are in general overseen by the network operator, which in New Jersey is PJM Interconnection LLC (PJM). The wind developer is required to coordinate onshore landing of the export cables with PJM, landowners, and the local and state governments.  PJM acts as an independent party under the regulation of the Federal Energy Regulatory Commission (FERC), and operates one of the world’s largest competitive wholesale electricity markets, which provides power to over 65 million people.

 

New Jersey’s 2035 goal

New Jersey has established itself as a leader in offshore wind development by enacting the Offshore Wind Economic Development Act (OWEDA) in August 2010.  The Act advised the Board of Public Utilities (BPU) to establish a programme for ORECs to incentivise the development of offshore wind facilities.

 

In January 2018, New Jersey’s governor signed Executive Order No. 8, which directed NJBPU to fully implement the OWEDA and work towards achieving the goal of 3,500 MW of offshore wind by 2030. In response, in September 2018, NJBPU issued a solicitation for the first 1,100 MW of offshore wind capacity — the largest single solicitation issued by any state at that time. Following which, in June 2019, NJBPU selected Denmark-based Ørsted for its 1,100 MW offshore wind solicitation. The project is presently underway and should be operational by 2024. Later, in November 2019, the governor signed Executive Order No. 92, which increased the state’s offshore wind energy generation goal to 7,500 MW by 2035.

 

In February 2020, the governor announced the offshore wind solicitation schedule to meet the 7,500 MW goal by 2035. New Jersey plans to hold five solicitation rounds from September 2020 until the first quarter of 2028. The proposed schedule calls for the next 1,200 MW solicitation to be opened by September 2020, with an award made by the second quarter of 2021.

 

The second 1,200 MW round in this schedule, and the state’s third solicitation overall, is scheduled for the third quarter of 2022. Another 1,200 MW solicitation is expected to open by the second quarter of 2024. The final two rounds will be for 1,400 MW and will open by the second quarter of 2026 and the first quarter of 2028, respectively.

 

Table 1: Proposed OSW Solicitation schedule through 2035

Solicitation

Capacity target MW

Issue date

Submittal date

Award date

Commercial operation

1

1,100

Q3 2018

Q4 2018

Q2 2019

2024

2

1,200

Q3 2020

Q4 2020

Q2 2021

2027

3

1,200

Q3 2022

Q4 2022

Q2 2023

2029

4

1,200

Q2 2024

Q3 2024

Q1 2025

2031

5

1,400

Q2 2026

Q3 2026

Q1 2027

2033

6

1,400

Q1 2028

Q3 2028

Q1 2029

2035

Source: New Jersey Board of Public Utilities (BPU); Global Transmission Research

 

Second solicitation

Recently, in July 2020, NJBPU issued a draft guidance document for its second offshore wind solicitation.

 

The document outlines the solicitation seeking to secure ORECs targeting 1,200 MW to 2,400 MW of qualified offshore wind project(s) or qualified projects. The latter are wind turbine generation facilities located in the Atlantic Ocean in designated BOEM lease areas and connected to the transmission system in New Jersey, including the associated transmission-related interconnection facilities and equipment, which have been approved by BPU.

 

Developers need to submit an application in response to the solicitation for the project they wish to be qualified for the bidding process. . As per the guidance document, an applicant may submit multiple projects in an application, with each specific configuration of the wind turbine electric generation facility, associated design elements, and offer components constituting a separate project.

 

The current timeline in the draft document anticipates the NJBPU will consider the second solicitation at a Board meeting in September 2020. The deadline for submitting applications is December 2020. The results of the solicitation are expected to be issued in June 2021.

Noteworthily, NHBPU reserves the right to select less than 1,200 MW or more than 2,400 MW, if circumstances warrant.

 

Offshore Wind Strategic Plan (OWSP)

As the first 1,100 MW offshore wind project is underway, New Jersey is formulating immediate and future steps to promote this nascent industry. The draft OWSP focuses on several priorities that the state intends to pursue in trying to build a robust offshore wind industry while protecting its natural and environmental resources; maintaining viable commercial and recreational fishing; building a supply chain and training a workforce; identifying ports and potential ports to serve the sector; and tackling transmission infrastructure to bring power from offshore wind farms to homes and businesses.

 

The OWSP incorporates scientific studies and data, state agency input, industry expertise and stakeholder input to help meet New Jersey’s offshore wind goals.

 

Furthermore, the draft mentions that two ports, namely, the New Jersey Wind Port in Salem County adjacent to the nuclear units there, and Paulsboro, will play an important role in the early development of offshore wind power. These are labelled especially critical in the rollout of the state’s first offshore wind farm of 1,100 MW by Ørsted by 2024.

 

The way forward

New Jersey is working actively to grow its offshore wind industry. The state’s recent activities indicate the administration’s commitment to achieving 7,500 MW of offshore wind energy by 2035 and carbon neutrality by 2050. That said, the state’s management of offshore wind development will need to continue over the various phases of its plan through 2035 and beyond so as to determine the future course of offshore wind transmission in New Jersey as well as in the US.