On June 28th both houses of the legislature passed S2036. It now waits for the Governor to sign it into law, which he is expected to do. S2036 does two things for offshore wind. First it creates an offshore wind renewable energy credit or OREC. Second the bill provides additional financial incentives for building offshore wind farms and encourages manufacturers of wind turbines and related equipment to locate their facilities in NJ.
S2036 encourages the offshore wind industry by creating ORECs. An OREC is equal to one megawatt hour of electricity from an offshore wind project. The bill also requires the Board of Public Utilities to set up a schedule of electricity that must be supplied from offshore wind power similar to the carve out for solar.
S2036 amends NJ’s 1999 deregulation of electrical generation to create the ORECs. As part of the 1999 deregulation the State set in place a renewable energy portfolio requirement. The law and its regulations required electricity utilities to supply a certain percentage of its electricity from renewable sources. These utilities could generate their own renewable energy or they could purchase renewable energy credits from those people and business that have installed renewable energy systems. These RECs would then count towards the utilities’ RPS requirements. The RPS increases overtime. Currently the State plans to obtain the equivalent of 30% of its electricity from renewable sources by 2022. The State also really wanted to encourage solar systems so it broke out from the RECs the SREC (solar renewable energy credit) and a corresponding solar RPS. These SRECs are partially responsible for NJ being #2 in the nation for renewable energy. The SRECs are also one of the reasons that NJ has the shortest return on investment periods for solar anywhere in the country. It is the legislature’s hope that ORECs have a similar impact that SRECs did for solar installations.
The second part of the bill provides incentives for manufactures to locate their facilities in NJ. The bill amends NJ’s Global Warming Solutions Fund law to reallocate some of the money that NJ gets from the RGGI auctions. These monies are available as grants or “other forms of financial assistance” to manufacturers of wind turbines and associated equipment who locate their plants in NJ. Offshore wind projects can also receive these monies to help finance the project.
There are four wind farm projects proposed for the waters of New Jersey. Hopefully this bill helps create the financial incentives needed to keep these projects moving forward as well as enticing new projects.