On August 19, 2010, Governor Christie of New Jersey, signed into law the Offshore Wind Economic Development Act (“OWEDA”), which aims to significantly bolster the state’s offshore wind generation by requiring that a certain percentage of the state’s renewable energy portfolio come from offshore wind generation and by providing financial assistance to qualified offshore wind projects, equipment manufacturers and assembling facilities.
OWEDA directs the New Jersey Board of Public Utilities to establish an offshore wind renewable energy certificate program (“OREC”), which would be similar to the solar renewable energy credit program that currently exists in the state. The creation of the OREC program will likely drive up prices for ORECs in the same way New Jersey’s Solar REC program drove up prices for Solar RECs. The OREC program will provide offshore wind developers with a stable stream of revenue and, in addition to the higher pricing, will make the offshore wind projects more attractive to potential lenders or investors. The new bill mandates that the OREC program support at least 1,100 megawatts of offshore wind development.
In addition to the establishment of the OREC program, OWEDA will also provide financial assistance to qualified offshore wind projects and associated equipment manufacturers and assembling facilities through the New Jersey Economic Development Authority (“EDA”), including up to $100 million in tax credits for the development of wind energy facilities. Through these incentives, New Jersey hopes to develop in-state manufacturing businesses for offshore wind turbine parts by attracting foreign wind turbine manufacturers looking to create facilities in the United States through the incentives. According to a press release issued by the New Jersey Senate, there is currently no United States based facility that exists to produce the parts needed for offshore wind projects.
The New Jersey renewable portfolio standard, which is one of the most aggressive in the country, currently requires supplier serving retail customers in the state to procure 22.5% of its power from qualifying renewable resources by 2021.
For more information or questions regarding OWEDA or the OREC Program, please contact Craig Kline located in our New York office at 212-704-6150 or Craig.Kline@troutmansanders.com. The press release issued by Governor Christie can be found here.