Fishermen’s Energy has worked extensively to assemble a New Jersey based consortium that would implement, operate and maintain the project including Weeks Marine, Northstar Marine, Gabel Associates, DCO Energy and center operations on the South Jersey Port. Overall this resulted in more than 50% of the capital cost landing in New Jersey. This was documented in the form of proposals and in some cases draft contracts submitted to the BPU. Fishermen’s Energy also clearly stated a willingness to make this “build New Jersey” a contractual obligation, knowing full well that this would have to be demonstrated in order to pass the cost benefit test, but perhaps more importantly, truly demonstrate the job creation and positive impact that offshore wind could bring to New Jersey. In documenting the economic impact on New Jersey, Fishermen’s Energy used software and multipliers that were used recently by the BPU in substantiating the same positive benefits from the SRECs.
Fishermen’s Energy proposed a payment mechanism in which an OREC ($/MWH) payment would be made for each unit of energy produced. It is a simple performance metric: No energy produced -no payments due. There are no capacity payments, no adjustments for reduced performance or any other mechanism that shifts risk to ratepayers. 100% of the risk associated with the project is held by the developer and its owners, even pre-funding the ultimate decommissioning of the project. The proposed cost to New Jersey ratepayers is less than 10% of the cost of the Rhode Island demonstration project, while construction impacts on local economies are projected to be about the same. Development of the Fishermen’s Atlantic City Wind Farm has proceeded in association with a world class team of European, Asian, and US advisors including turbine suppliers, environmental engineers, foundation engineers, Owner’s Engineer / project management advisor (Mott MacDonald), and finance providers (e.g. XEMC NE) and draws upon the internal management experience of Fishermen’s Energy. The balance of implementation is predicated upon approval by the NJ BPU of an acceptable OREC Pricing Plan. In a simplified form, the sequence of events after a BPU approval of an acceptable OREC Order will be as follows: (1) Final Equipment Selection (2) Final Engineering (3) Vendor and Contractor Contract Negotiation (4) Financial Close (5) Letting of major contracts (6) Fabrication (7) Construction – in the water 3rd Quarter 2014 (8) Commissioning (9) Commercial Operation – 4th Quarter 2014 1. Increase in economic activity from constructing, operating and maintaining a $200,000,000 project 2. Savings generated by offsetting the need to purchase Class I RECs 3. Impact on the economy from increasing tourism in Atlantic City over the life of the project 4. Energy and Capacity value credited back to the ratepayer from electricity sold from the Project 5. Impact on the economy from reducing air pollution by displacing power from fossil fuel fired power plants 6. Impact on the economy from the price suppression effect of bringing on new electric generating capacity that will force reduced operation from the most inefficient existing generators in the fleet 7. Impact on the economy by using this project as a platform for evaluation and incorporating lessons learned to optimize construction and operations of future commercial scale projects 8. Impact on the economy by using this project as a platform to reduce the financing cost of future commercial scale projects by eliminating the uncertainty around how projects will be financed using ORECs as a source of revenue 9. Impact on the economy from certain other benefits such as increasing recreational fishing, and the value of creating artificial reefs have not be included in this calculation as no methodology was determined to value these impacts The proposed project is in an advanced state of development. Work completed to date demonstrates the feasibility of the project, makes the timeline real (ie. permits in hand), removes risk of unforeseen obstacles, and budgetary surprises (ie. no rock below seabed surface). The project has completed significant development milestones, including:
From the Second Inaugural Address of President Barack Obama “We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity. We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms. The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries — we must claim its promise. That is how we will maintain our economic vitality and our national treasure — our forests and waterways; our croplands and snowcapped peaks. That is how we will preserve our planet, commanded to our care by God. That's what will lend meaning to the creed our fathers once declared.” From “One Today” The Inaugural Poem by Richard Blanco “…One ground. Our ground, rooting us to every stalk of corn, every head of wheat sown by sweat and hands, hands gleaning coal or planting windmills in deserts and hilltops that keep us warm, hands digging trenches, routing pipes and cables, hands as worn as my father’s cutting sugarcane so my brother and I could have books and shoes…” The Fishermen’s Energy Atlantic City Wind Farm has a number of unique challenges to master simply because it is first. · Permitting agencies were doing this for the first time and had to be educated and precedents set · There are no ports experienced in marine construction of this magnitude. Everything needs to be done for the first time. · There are no vessels readily available for construction – either to lift equipment or move personnel · There are no service vessels available on an as-needed basis so vessels will haves to be built and dedicated to the project · There are no local contractors with prior experience in offshore wind construction, resulting in conservatism in bidding and costing · This OREC petition approval process has cost millions (just filing alone has cost more than the entire development cost associated with similar sized land-based project) · There are an immense amount of lessons learned by Fishermen’s Energy and BPU staff already European offshore wind farms have been demonstrated to be tourist attractions even 20 years after the first offshore wind project was completed. People are fascinated by construction and operations of wind farms and show up to witness the erection of even a commonplace wind farm on land. A small 40 MW wind farm 2 miles off of Copenhagen built in 2003 supported no less than 3 tour boats. Locating the nation’s first wind farm off of an already large tourist destination (Atlantic City) is expected to amplify the attraction. Examples of the tour boat industry that have flourished around wind farms include: · The Scroby Sands Wind Farm, commissioned in 2004, reports 35,000 visitors annually to their information center. (www.eon-uk.com/generation/tourism.aspx). · The Sheringham Shoal Offshore Wind Farm is expected to be completed in 2012. Currently, the town's museum includes a collection of old lifeboats, various displays and a viewing tower and houses the Sheringham Shoal Offshore Wind Farm visitor and wind energy education centre. · Horizon Sea Safaris (www.horizonseasafaris.co.uk/) offer power boat tours to a number of wind farms, including Thanet Offshore Wind Farm and the Kentish Flats Wind Farm. Kent Coastal Activities are listed at http://kentcoastalactivities.org/page2index.html . · Sea Searcher Boat Trips (www.seasearcher.co.uk) also offers a 3 hour trip to the Thanet Offshore Wind Farm. · Franlis (www.franlis.be) offers trips to the Thornton Bank wind farm, the first Belgian offshore wind farm. · The Middlegrunden Wind Farm, Copenhagen, (www.middlegrunden.dk) offers a number of different options for visiting the offshore wind farm. Boat trips range in size from small boats seating up to 9 people, larger boat that seats up to 170 people. Marine, Eco and Dinner cruises are also available. A number of other tours are offered at www.sparshipping.dk, www.flakfortet.dk and www.helle-boe.dk. Fishermen's Energy has petitioned the New Jersey Board of Public Utilities for approval of its Atlantic City offshore wind project. This pilot project, which has received all of its NJDEP approvals, will be a 25 megawatt project to be located 2.8 miles from Atlantic City. It is being proposed in accord with the Offshore Wind Economic Development Act, signed into law by Governor Christie in August 2010.
Included in this law is a provision that projects demonstrate that their benefits are greater than their costs in order to qualify for receipt of the ORECs. Fishermen’s Energy has submitted an application which draws from several expert economic consultant reports describing the benefits and costs of the Project and showing that net economic benefit is created for the State of New Jersey. · Benefits of implementing an offshore wind project are varied – ranging from creation of hundreds of jobs, training contractors, building vessels, increasing tourism all the while building a foundation for a new homegrown industry here in New Jersey. Wages and benefits from construction alone create more than $150 million of added economic impact into New Jersey’s economy (under the Optimized Project). · Costs are caused by the Project's 0.106% electric rate impact or $1.62 annually per residential household, roughly a cup of coffee each year. · Lessons Learned- you need to learn how to walk before you can run; there is a societal value in doing a demonstration project at the dawn of new industry. · Net Economic Benefits are calculated to approach $1 billion over the life of the project on a net present value basis. Proceeding with the proposed project builds upon the ground breaking work done by New Jersey over the last decade and announces that New Jersey is open for business. It positions New Jersey to be the unrivaled leader in capturing the economic development benefits from offshore wind for decades to come. The pride, momentum and excitement that a project like this builds for the State of New Jersey is invaluable, but is not calculated as part of the formal cost benefit analysis. Fishermen’s Atlantic City Wind Farm is configured as a line of turbines approximately 2.8 miles off of Atlantic City. Turbines are aligned in this fashion to put them as far as possible offshore but still remain within the state of New Jersey’s 3-mile jurisdiction. Spacing between turbines is optimized so that they are far enough apart to avoid interference with one another, but close enough so that cable cost is not excessive.
Water depth across the line of turbines ranges from 24 to 40’ deep. For offshore wind this qualifies as shallow water relative to the 150’ depths in which European projects are now being implemented. This location presents an iconic and visible symbol to brand the City of Atlantic City as the “Birthplace of offshore wind in the Americas”. |
CatchThis_NJThis blog describes the benefits of the Fishermen's Energy Wind Farm off the coast of Atlantic City, NJ Archives
October 2014
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