2 years after Christie's call for green era, little has changed

Sep 1 - McClatchy-Tribune Regional News - James Osborne The Philadelphia Inquirer

Two years ago, Gov. Christie stood at a shuttered oil storage facility in Paulsboro and heralded a new era in which wind farms would line the Jersey Shore and the struggling refinery town would be revitalized by a new port and hundreds of new green-energy jobs.

But to date, no projects have been approved and a system of ratepayer-funded subsidies that was supposed to get the wind operations off the ground still has not been agreed upon.

"Early on, there was a lot of momentum, but now it feels like things have really slowed down," said Matt Elliott of the advocacy group Environment New Jersey.

The logjam in New Jersey mirrors the situation up and down the Eastern Seaboard, as the future of federal price supports falls into doubt and the promise of clean, renewable power goes up against the high price tag of installing 400-foot-tall turbines 20 miles out to sea.

The issue came to the political fore in New Jersey this week with Democratic legislators led by Senate President Stephen Sweeney (D., Gloucester) accusing Christie of publicly supporting offshore wind while hamstringing it behind the scenes.

"They've had plenty of time to do it. They're just dragging their feet and I think some of it is because [Mitt] Romney is anti-wind," Sweeney said in an interview. "The Republican platform is 'Drill, baby, drill,' and I'm worried New Jersey is falling behind."

Sweeney, a leader with the International Brotherhood of Ironworkers, is pushing for the new port in Paulsboro to serve as the hub of the offshore wind industry in the Mid-Atlantic and to bring blue-collar jobs back to South Jersey.

After Sweeney held a news conference with other party legislators early this week, the Governor's Office responded by shifting blame for the delays to federal maritime officials.

They have "repeatedly moved the dates by which they 'intend' to conduct the auction for leases on the Outer Continental Shelf outside New Jersey," a Christie spokesman said in an e-mail. "Renewable energy is a critical aspect of our energy policy."

Since Congress authorized the construction of offshore wind farms in 2005, only one project -- off Cape Cod -- has gotten a lease in federal waters, according to the Bureau of Ocean Energy Management. And that is now under litigation, with no start date for construction.

Electricity generated by offshore wind is expensive -- more than twice as costly as onshore wind power because of the high cost of building in the open ocean -- and developers are banking on a complex set of government subsidies to make their operations profitable.

But the future of those programs is in flux.

Last year, Congress allowed a $16 billion loan-guarantee program for alternative-energy projects to expire -- though a similar but smaller program was launched in April -- and now another tax credit program is set to expire at the end of the year -- something Romney said he does not plan to renew if elected president.

One major developer, Bluewater Wind, part of the electricity giant NRG Energy, has put its offshore projects on hold, citing the uncertainty of federal subsidies.

And with natural gas prices at historic lows since the tapping of massive deposits in formations like the Marcellus Shale, energy companies are less inclined to invest in offshore wind, said Sam Jaffe, an analyst with IBC Energy Insights.

"When you do the economic analysis of an offshore wind park to see how expensive that electricity is, it used to be it looked favorable compared to natural gas. But that's not the case any more," he said.

Companies say larger subsidies, such as China and Europe allow, are necessary, but that's not something anyone expects President Obama or Romney to do in the current economic climate.

The Christie administration wants to offer added incentive by raising electricity rates and offering a bonus to those power companies that generate through offshore wind.

But figuring out a means of administering that system -- not to mention how much to pay the power companies -- has proved long and, participants say, inordinately complex. It involves lengthy negotiations among environmentalists, ratepayers, multiple government agencies, and the energy companies.

"Everyone wants it tomorrow, but it's not going to move at lightning speed. There are a lot of unknowns," New Jersey Assistant Environmental Commissioner Bob Marshall said. "Look at Massachusetts. They rushed to a lease sale with great fanfare and two years later, there are no wind farms. There are a lot of tough decisions on the development that need to be done at the outset."

But with a new $150 million port scheduled to open in Paulsboro in 2014 that hopes to attract the legions of manufacturers and technicians needed to one day build offshore wind parks, the delays could deal a serious blow, Sweeney said.

The common thinking is the state that builds the first offshore wind park will have a jump on establishing itself as the manufacturing center for the industry.

Two years ago, the expectation was New Jersey would be first. But that is becoming less likely as other states take steps to get out of the gate faster, Sweeney said.

The Christie administration says it remains hopeful the state can move forward quickly; Marshall said he hoped to see offshore leases sold by next spring.

But within the industry, the outlook is gloomy.

Insiders anxiously awaiting the result of November's election, don't expect much of any movement before the end of the year.

And a 25-megawatt wind project just three miles off the coast of Atlantic City that appeared close to construction -- it was in state waters and did not require a federal lease -- was put on hold Wednesday so the developer, Fishermen's Energy, could address price concerns in its application for a state subsidy.

Despite struggling to get that relatively modest project off the ground, the company, which was formed by a consortium of East Coast commercial fishing companies, still intends to move ahead with its larger plans to build in federal waters, company spokeswoman Rhonda Jackson said.

"We've got so much invested into this process," she said. "We've done more than two years of avian studies. We have [meteorological] equipment sitting on top of a condo building in Margate."

Contact James Osborne at 856-779-3876, jaosborne@phillynews.com, or follow on Twitter @osborneja.