NJ ratepayers could pay billions more if Atlantic Shores wind allowed to rebid contract

TRENTON — A group of coastal New Jersey towns are urging state officials to reject any attempts by an offshore wind developer to rebid its power project and increase the cost of electricity.

Across the nation, offshore wind developers have been renegotiating contracts, citing rising costs from supply chain disruptions, high interest rates and inflation.

Last week, officials from eight towns – Long Beach Township, Beach Haven, Ship Bottom, Barnegat Light, Surf City, Harvey Cedars, Brigantine and Ventnor City – sent a letter to the state Board of Public Utilities urging officials there to deny any attempt by Atlantic Shores Offshore Wind to rebid its existing New Jersey power project.

Rebidding projects has allowed state officials and offshore wind developers elsewhere to renegotiate prices for ORECs, or offshore wind renewable energy certificates. In New York, Denmark-based wind developer Ørsted rebid its Sunrise Wind project and oil company Equinor rebid its Empire Wind 1 project, according to Reuters. The rebidding followed post-pandemic surges in prices for materials and labor as well as higher interest rates.

Offshore developers earn one OREC for each megawatt-hour of electricity produced through wind turbines. Each OREC price in New Jersey is set in an agreement between the state Board of Public Utilities and the wind developer and is calculated based on federal and state tax credits, operational costs, and electricity customer impacts, among other factors.

In 2021, Atlantic Shores Offshore Wind was awarded an OREC price beginning at $86.62 per megawatt-hour in year one of its 20-year contract, increasing 2.5% annually, according to Board of Public Utilities documents.

Now, the coastal towns fear Atlantic Shores Offshore Wind will rebid its original project – a 157-turbine project off Atlantic City – and obtain higher OREC prices.

Earlier this year, the utilities board approved two more offshore wind projects and awarded OREC agreements at far higher rates. Attentive Energy Two agreed to an OREC price of $131 per megawatt hour in the first year of the project with 3% each year afterward. Leading Light Wind will receive an OREC price of $112.50 per megawatt hour in year one, then 2.5% increase each year following.

High costs have led companies to cancel offshore wind projects. Last year, Ørsted abandoned plans to build two offshore wind turbine farms in New Jersey. The company was awarded an OREC price of $98.10 per megawatt hour for its first year of operation.

Other projects throughout the Atlantic have also been canceled or renegotiated due to rising costs. Equinor and oil company BP announced in January they would "reset" their joint New York project known as Empire Wind 2 and cited "changed economic circumstances."

Related: Feds seek input on 157-wind turbine project off Long Beach Island

That same month, Ørsted announced it would "reposition" its Skipjack Wind project in Maryland, saying its initial "payment amounts for ORECs… are no longer commercially viable because of today’s challenging market conditions, including inflation, high-interest rates and supply chain constraints."

Atlantic Shores' existing project also has OREC prices well below that of the two New Jersey wind projects approved earlier this year. Atlantic Shores' project would raise electricity prices about $2.21 per month (in 2023 dollars) for the average homeowner, according to estimates. In comparison, the Attentive Energy Two project would raise electricity bills for homeowners about $3.13 per month (in 2023 dollars) and Leading Light Wind would have an estimated $3.71 per month impact on homeowners' bills, according to Board of Public Utilities' documents.

The New Jersey shore towns, in their letter to the utilities board, said they worried that if Atlantic Shores rebid its current project and is awarded a higher OREC price, that New Jersey ratepayers would face billions of dollars of additional electricity costs over the length of the project.

A spokesperson for Atlantic Shores declined to say if the company was rebidding, but said in an email to the Press: "Atlantic Shores remains committed to New Jersey and delivering its offshore wind portfolio. We continue to evaluate the draft solicitation guidance document while driving our projects forward, bringing good jobs and clean, renewable power to the Garden State."

The state Board of Public Utilities is currently in its fourth round of bidding for offshore wind energy projects. The fourth solicitation for bids is expected to open sometime before the end of June.

Despite the rising costs for offshore wind energy, the federal government continues to approve wind power projects. On Tuesday, the Biden administration announced approval of the nation's eighth offshore wind project south of Martha's Vineyard, Massachusetts, called New England Wind.

"We will continue to use every available tool to ensure America leads the future of the offshore wind industry," National Climate Advisor Ali Zaidi said in a news release. "This is a win-win-win for workers, communities, and our ability to tackle the climate crisis."

Amanda Oglesby is an Ocean County native who covers education and the environment. She has worked for the Press for more than 15 years. Reach her at @OglesbyAPP, aoglesby@gannettnj.com or 732-557-5701.

This article originally appeared on Asbury Park Press: Offshore wind NJ: Shore towns claim rebid would cost billions more