To catalyze the development of offshore wind farms, New Jersey has enacted legislation creating a carve-out for offshore wind generation within the NJ Renewable Portfolio Standard. Commodities known as “Offshore Renewable Energy Certificates” (ORECs), essentially the offshore wind equivalents of SRECs, will have to be obtained by electricity suppliers to demonstrate that a percentage of their electricity has come from offshore wind. This “Offshore Wind Economic Development Act” was signed by Governor Chris Christie on August 19th and may be necessary for New Jersey to reach its RPS goals from in-state resources. As currently designed, the NJ RPS requires that 22.5% of energy come from renewable sources by 2021.
Proponents argue that this new OREC market will make NJ a national leader in offshore wind production and create green jobs, just as the high incentives from the SREC market have made the State a solar powerhouse (In the US, NJ is second only to California in solar installations). Opponents are skeptical of the costs involved, and estimates from business groups claim the price tag may be as high as $14 billion. While offshore wind has inherently high fixed costs, due to in part to necessary transmission lines and other construction challenges, a market-based RPS is likely the most efficient way to incentivize a promising technology and ease the financing concerns of developers.
This legislation reinforces New Jersey’s status as a national leader in renewable energy development. The New Jersey Board of Public Utilities has 180 days to determine the exact design of the OREC program, including the percentage of energy electricity suppliers must obtain from offshore sources.
The move to an OREC market is another example of the success that the SREC market has had in New Jersey. Since launching in 2004, New Jersey’s SREC program has become a template for reaching RPS solar goals in several states. That template is now being applied to other types of renewable energy. In this case, the off-shore wind industry will benefit.
More information can be found here.