United States

United States

Offshore push by state agencies -- Northeast initiative

Energy industry-friendly New Jersey and nearby Rhode Island are moving forward with proposals to develop private-public partnerships to lure wind development off their coasts. Both states have some of the best winds along the Northeast shoreline, the continental shelf provides shallow areas far offshore, energy demand from congested metropolitan areas is soaring, and energy prices are among some of the highest in the nation--making offshore wind look like a competitive alternative. Map: The map shows proposed locations for offshore wind turbines along part of the Eastern Seaboard.

Energy industry- friendly New Jersey and nearby Rhode Island are moving forward with proposals to develop private-public partnerships to lure wind development off their coasts. Both states have some of the best winds along the Northeast shoreline, the continental shelf provides shallow areas far offshore, energy demand from congested metropolitan areas is soaring, and energy prices are among some of the highest in the nation -- making offshore wind look like a competitive alternative.

New Jersey's Board of Public Utilities (BPU), which has a history of supporting renewables, is putting up to $19 million on the table to catalyse an offshore wind pilot project of up to 80 turbines. As part of the funding, the BPU will provide up to 10% of the total incentive up front to help conduct the needed studies and prepare permit applications.

The BPU is requesting bids from private developers to build the pilot project in an expanse of ocean extending 116 kilometres along the coast and 32 kilometres out to sea. Bluewater Wind, pushing a project in Delaware (previous page) has expressed interest. Specific bids are due in January when part of the $19 million could be allocated to a winner.

The state took a further step last month by awarding a $4.4 million contract to environmental research firm Geo Marine Incorporated (GMI) for an 18-month ocean and wind power ecological study for the New Jersey Department of Environmental Protection. GMI says this represents the first time an American state has sponsored an offshore wind study before allowing renewable energy developers to study a state's coastline.

For its part, the small state of Rhode Island, a little further north, wants to play a strong stakeholder role through a private-public partnership. State energy officials, with Governor Donald Carcieri's backing, are trying to pass legislation to create the Rhode Island Power Authority (RIPA). The organisation will help development of energy projects with an emphasis on renewables and trade their power for the benefit of Rhode Islanders. RIPA is a public corporation created to develop renewable energy resources.

Carcieri's chief energy advisor, Andy Dzykewicz, is heading up the effort. He says Rhode Island's approach is fundamentally different from other offshore bids off the Northeast coast, such as Cape Wind and FPL Energy's Long Island Power Authority proposals. "We've seen how the typical developer approach -- finding a single site and forging ahead even in the face of stiff resistance -- has yielded limited success in New England. So we opted for a radical departure," says Dzykewicz.

If established, RIPA aims to create a broad stakeholder, consensus-driven effort to develop an offshore project, provide attractive financing through agency bonds, and to become a wholesaler of the energy output. Since the state represents only 6% of the energy demand on the local New England Power Pool (NEPOOL), it would not get much financial kick-back from a pure investment in the project. But by taking a stake as the wholesaler -- in exchange for greasing the wheels of development -- it could sell the power to local state agencies first and then to the wider NEPOOL market which pays high spot energy prices. "A Rhode Island offshore project for Rhode Island," says Dzykewicz, who adds that four wind developers have expressed interest. One of them is New York investment firm Allco Renewable which in September applied for preliminary permits to site 338 turbines at four sites off the coast.

Both the Rhode Island House and Senate are considering bills to establish RIPA, which Dzykewicz says will be essential for meeting state green energy requirements. The state enacted an aggressive renewable energy mandate in June 2004 that requires all retail electricity providers to supply 16% of their sales from renewable resources by the end of 2019. A gradual escalation begins this year at 3% and rises incrementally.

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