releases: https://chrissmith.house.gov/news/documentsingle.aspx?DocumentID=413319
Data license: MIT · Data source: dwillis/congress-press
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| https://chrissmith.house.gov/news/documentsingle.aspx?DocumentID=413319 | TAPInto article on wind farm risks'The High Cost of Offshore Wind: What NJ Residents & Businesses Need to Know '' | 2024-08-18 | 2024 | 2024-08 | Republican | House | NJ | Christopher H. Smith | S000522 | chrissmith.house.gov | chrissmith | https://chrissmith.house.gov/news/documentquery.aspx | scraper | By Jim Lonergan - Editor At a recent field hearing in Brigantine, Congressmen Jeff Van Drew (D-2) and Chris Smith (D4) led a discussion on the implications of the proposed offshore wind programs. They were joined by PA Congressman Scott Perry (PA-10) and a panel of experts to provide their viewpoints to New Jersey residents about the potential impact of these initiatives. This article, part of the TAPinto Gold Coast offshore wind energy series, is focused on the possible financial effects offshore wind energy may have on households and businesses statewide. To clarify the funding basis and the New Jersey Board of Public Utility's (NJBPU) role in offshore wind development, former NJBPU President and Commissioner Joanne Solomon explained: "The NJBPU is tasked with ensuring safe, reliable utility service at reasonable rates. Essentially, the Board functions as an economic regulator. While they don’t set policy on energy sources, they are required to implement legislative directives. The legislation authorizing offshore wind development mandates that there must be a net benefit to ratepayers—encompassing reliability, safety, environmental attributes, and economic development. In short, the benefits must outweigh the costs. However, the proposals received for offshore wind are significantly more expensive than conventional energy resources." Concerns about the economic viability of offshore wind projects came to the forefront when Orsted, the developer, canceled the first two New Jersey offshore wind projects citing a "lack of economic viability," according to Orsted's CEO (click HERE for related article). Financial Impact to NJ Taxpayers Independent energy expert Ed O'Donnell of Whitestrand Consulting LLC who has studied, written, and testified about Offshore Wind Energy told TAPinto Gold Coast "Offshore Wind is not economically viable without major subsidies in the form of Federal Tax credits and guaranteed above market utility prices for power generated." There are four main components of costs: 1) NJ Electric Power generated (i.e. rate payers) 2) NJ transmission ratepayers 3) Federal subsidies, (i.e. US taxpayers throughout the country 4) and as O'Donnell said "a major element that has not been factored into NJ's cost/benefits analysis - the massive rebuild of the power grid, which in its current state is not built to handle this new power." Power generation costs: O'Donnell's analysis shows that the gap between subsidized offshore wind power prices and market prices is expected to grow from $42/MWh (4.2 cents/kWh) in 2030 to $144/MWh (14.4 cents/kWh) by 2047—a 243% increase as more offshore wind energy is added to the grid. The NJBPU has been instructed to award above-market Offshore Renewable Energy Credits (ORECs) to attract offshore wind producers. The NJ Rate Counsel, an independent state agency, has also raised concerns about the rising costs of offshore wind and its impact on ratepayers, urging lawmakers to reconsider or slow down the expansion as "ratepayers simply cannot afford drastically higher electric bills.’’ (click HERE for more detail). In speaking with Director Lipman, he added, "Rate Counsel is closely watching the ongoing offshore wind proceedings and remains concerned about the cost of offshore wind, as well as all the other costs faced by ratepayers," According to Whitestrand Consulting LLC, the chart below depicts the projected market price of energy (PJM)- a power pool of energy between NJ, PA, and MD - vs offshore wind pricing (OREC) with the above market subsidies factored in from 2030 (the initial projected start time of offshore wind going online) - through 2047. The gap between market rates and the new wind rates is $141/MWH or almost 3X the market expense. Transmission Costs: Below is a visual of the impact on energy rates without offshore wind and with offshore wind in the mix based on the analysis done by O'Donnell, according to Whitestrand Consulting LLC. As the chart shows, the added offshore wind costs progressively increase. In 2022, the average New Jersey residential customer paid 16.4 cents/kwh for electricity, the 9th highest in the US and 20% higher than the national average according to the US Energy Information Administration. O'Donnell projects these rates to rise to 32 cents/kwh by 2047, or 2X current rates or over $1,000/yr to the average residential customer. According to Whitestrand Consulting LLC, the graph below depicts the doubling of annual charges the average New Jersey residential customer will face. Whitestrand Consulting LLC says that for commercial ratepayers, their rates will increase to almost $8,300 per year by 2047, or $95,000 over the period 2028-2047. For industrial companies, it is estimated their rates will see an annual increase of over $70,000 and pay $796,000 for the period of 2028 to 2047. Here is a visual of the cost impact of conventional energy vs Wind Energy to all customer types: Federal Subsidies: Currently, New Jersey utility ratepayers cover their own energy costs through usage-based power generation, transmission rates, and maintenance of the electric infrastructure. However, federal subsidies are now being used to attract offshore wind companies, many of which are large global oil corporations. As O'Donnell and the Biden and Murphy Administrations have pointed out, these subsidies are crucial because, without them, offshore wind projects would not be viable. This result of federal subsidies is that all U.S. taxpayers would essentially be funding the electric utility expenses of a few coastal states, including New Jersey. Solomon noted, "One developer has already withdrawn their bid because the state wouldn't provide enough subsidies to ensure a profit. Despite this, the current NJBPU board continues to push forward with additional solicitations, further driving up the cost of offshore wind with each new round." O'Donnell added, "It's absurd that the NJBPU keeps soliciting more bids because developers can't make enough money with the terms they've already accepted. They just keep coming back to NJBPU and other states until they reach a profitable level they're happy with." TAPinto Gold Coast provided NJBPU with the opportunity to comment but did not receive a response by press time. TAPinto Gold Coast will update the story should a response be received. O'Donnell explains, that what hasn’t been factored into these cost estimates is the required rebuild of New Jersey's electric grid. O'Donnell said, "The existing transmission network in NJ is incompatible with the Governor’s offshore wind plan. The current grid isn’t designed to handle the energy influx at its easternmost edge from a significant amount of offshore wind power. The state's Energy Master Plan (EMP) acknowledges that the grid will need major investments to upgrade and expand the network to support renewable energy and offshore wind programs. The NJBPU has been tasked with overseeing the planning for this and has begun the planning expansion by conducting periodic solicitations for transmission system upgrades and additions." In May, energy policy expert Mark Mills, Director of the National Center for Energy Analytics, teamed up with the Garden State Initiative (GSI) on a research report that analyzed the goals and challenges of New Jersey's Energy Master Plan (EMP). According to the report, "the plan is purely aspirational, and the report painstakingly proves that. The unrealistic nature of implementing this plan doesn't even take into account the price tag - which we estimate at $40 billion, and would drive even more people and jobs out of the state" said Audrey Lane of GSI. Congressman Van Drew remarked, "The current administration in New Jersey is determined to push forward with offshore wind development, regardless of the cost. By subsidizing an industry—wind energy—that is largely controlled by foreign companies, we risk becoming dependent on these nations for our energy needs. This means that not only will your federal tax dollars be used to subsidize their projects, but your utility rates will also be influenced by these companies." This article was originally published on August 18, 2024 by TAPInto Gold Coast, which serves Spring Lake, Spring Lake Heights, Sea Girt, Manasquan and Brielle and can be found online at https://www.tapinto.net/towns/gold-coast/sections/government/articles/the-high-cost-of-offshore-wind-what-nj-residents-businesses-need-to-know. | 1 | 2026-03-30T01:40:41Z | 2026-04-07T21:36:13Z |