The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) approved plans for constructing and operating “Ocean Wind 1,” a 1.1-gigawatt wind project offshore of New Jersey. The project is being developed by Danish energy company Ørsted, which is planning to start onshore construction this fall, begin offshore construction in 2024, and begin commercial operation in 2025. Ocean Wind 1 is the third commercial-scale offshore wind project to get final approval from the Biden administration, following Vineyard Wind offshore Massachusetts and South Fork Wind offshore Rhode Island. The New Jersey Department of Environmental Protection approved the project in April 2023.
BOEM completed a “deep environmental review” of the plans for Ocean Wind 1 in May and anticipated issuing a final decision by July 7. Apparently, a deep environmental review amounts to an “environmental assessment,” rather than an “environmental impact statement” under the National Environmental Protection Act, to which most mega-projects such as this must be subjected. The project is going forward despite opposition from NJ residents and dead whales that have washed up on NJ shores. On June 8, three groups filed suit in the Appellate Division of New Jersey’s Superior Court seeking to overturn the New Jersey Department of Environmental Protection’s sign-off on the project. The groups state that the project will “hasten the decline of marine species and destroy large parts of the seafloor by compression and hardening.”
Ørsted’s plan is to construct up to 98 Haliade-X 12 megawatt offshore wind turbines mounted on monopile foundations and 300 kilometers of inter-array cables to transmit electricity to three offshore substations within the lease area the company was assigned in 2021, according to the BOEM Record of Decision. The offshore wind farm will be located 15 miles off New Jersey’s shore. Electricity from the offshore substations will be transmitted onshore through three 275 kilovolt export cables with landfalls in Cape May County and Ocean County, New Jersey. The project also includes the construction of two onshore substations.
The turbines will be at least 906 feet in height (their blades, nearly as tall as the Empire State Building), with each tower weighing up to five million pounds. The approach approved by BOEM will provide at least a 0.81 nautical mile buffer between the Ocean Wind 1 wind turbines and the turbines for proposed nearby offshore wind project Atlantic Shores South. The buffer is designed to “minimize impacts to navigation and vessel traffic and commercial and recreational fishing.”
Governor Phil Murphy signed a bill to grant a major tax break to Ørsted that he had promised to residents to offset higher energy costs. The company is under contract to build a wind farm off the Atlantic City shore that in 2019 had a projected cost of about $1.6 billion. But, the company’s cost estimate has increased due to inflation and supply-chain issues. The tax break NJ lawmakers approved will offset a large part of Ørsted’s rising costs. However, the law deletes a previous provision in Ørsted’s agreement that required the company to use any federal tax credits it receives to offset the rates it will charge for the power it generates. The cost of the new deal is estimated to raise electricity bills up to $1 billion over several years. The benefits promised to consumers from the cash generated from federal tax payments to Ørsted are now going to the company. The state utilities board has also considered adjusting its contract for inflation, which would create another windfall for Ørsted.
The new law attempts to mitigate the public cost by requiring that Ørsted set aside $200 million in escrow with the state. But those funds amount to a fraction of the tax giveaway from the federal government. Under the Production Tax Credit, the government pays companies producing wind energy for each kilowatt hour of electricity. Tax credits range from 0.55 cents per kilowatt hour to 2.75 cents per kilowatt hour for producing wind energy.
Ørsted may not be the last wind bailout beneficiary. Atlantic Shores, a partnership of Shell and French firm EDF, is a separate offshore wind project in New Jersey that now indicates it needs more state help. Without “immediate action,” the company said “tens of thousands of real, well-paid and unionized jobs are at risk.”
These offshore wind projects will help New Jersey to achieve its self-imposed goal of producing 7.5 gigawatts of offshore wind power by 2035. Offshore wind is a part of New Jersey’s Energy Master Plan designed to fulfill the state’s goal of achieving 100 percent non-carbon energy by 2050.
Conclusion
Offshore wind is expensive—over 3 times more expensive than onshore wind. Yet, the Biden administration wants the American public to buy into it as part of President Biden’s climate agenda. The offshore wind plants are mega-boondoggles that just become more expensive as Biden’s inflation results in higher costs. Rather, than offsetting residents’ costs, however, as originally planned, Governor Murphy is providing the foreign wind company with additional tax breaks and making tax and ratepayers bear the cost. Apparently, the promised benefits to NJ ratepayers of “clean and green energy” will be “gone with the wind.”
