Dive Brief:

The New Jersey Board of Public Utilities (BPU) unanimously rejected an application Tuesday for a joint-venture of EDF Renewables and Fishermen's Energy to build a 25 MW pilot project in state waters off the coast of Atlantic City.

Regulators determined that the joint venture, Nautilus Offshore Wind, did not provide the necessary information to establish "positive economic and environmental net benefits to the state." The state rejected the project, originally proposed in 2009, on two other occasions for being too costly.

In addition, regulators unanimously adopted a rule to set a funding mechanism for the state's offshore wind program to ensure revenues "will flow back to ratepayers," according to the BPU's release. Democratic Gov. Chris Murphy has an ambitious goal to add 3.5 GW of offshore wind to the state's energy mix and the first solicitation is expected later this month.

Dive Insight:

New Jersey expects a flurry of offshore wind development in federal waters on a greater scale than the Nautilus project, as it aspires to use 100% clean energy by 2050. The BPU opened the largest single-state solicitation for offshore wind in September, for 1.1 GW of capacity, as part of the governor's 3.5 GW by 2030 goal.

Utility-scale projects in federal waters are expected to be more economic and far enough away to not endanger avian wildlife.

"The main problem with the [Nautilus] project was the location, and without changing the location there was no way to really mitigate the impact to wildlife," Kelly Mooij, vice president of government relations for New Jersey Audubon, told Utility Dive.

Nautilus aimed to be the first offshore wind development off the coast of New Jersey to demonstrate the capabilities of the technology, similar to Deepwater Wind's 30-MW Block Island offshore wind project in Rhode Island's state waters. Block Island is the only offshore wind plant in operation in the United States.

"With permitting already in place, Nautilus is the only project capable of giving New Jersey an early lead in the offshore wind space race," Doug Copeland, EDF regional development manager, told Utility Dive via email. "This rejection will delay workers' access to local and real-world training on offshore wind construction and slow early investments in critical supply chain infrastructure needed to support more large-scale projects."

Regulators determined that the price quoted by Nautilus was too high a burden to place on ratepayers. BPU noted that the application did not satisfy the state's Offshore Wind Economic Development Act as "Nautilus failed to provide the assumptions and inputs used in their economic multiplier modeling," and ultimately failed to demonstrate economic benefits to the state.

Copeland denied that Nautilus failed to provide requested information, according to NJ Biz.

The BPU will hold a solicitation on Dec. 28 and will select an economic consultant this week to help evaluate applications. The BPU aims to act on applications by July 1, 2019. Murphy requested that regulators open two additional 1.2 GW solicitations in 2020 and 2022.

Environmental groups that did not support development of the Nautilus pilot are excited to support the development of larger projects that are not in the near-shore environment, according a joint press release from New Jersey Audubon and the National Wildlife Federation.

"We want to make sure that it's done responsively. So we think the project was rightfully denied by the BPU, but we look forward to the solicitation that's coming up on the 28th," Mooij said.