At 3 million pounds, the first foundation for New Jersey wind is complete but its maker sees trouble ahead ," ("Inquirer," Jute 22, 2023)

by Frank Kummer
Updated on Jun 22, 2023, 5:15 a.m. ET

The first foundation ever assembled for a wind turbine in the U.S. resembles a big yellow rocket as it rests horizontally at the Paulsboro Marine Terminal on the Delaware River in Gloucester County.

The three million-pound, 300-foot-long, all-steel foundation, known as a monopile, is composed of three four-inch-thick tubes welded together. The top section is tapered and coated with protective epoxy paint.

The monopile will eventually be rammed 100 feet into the ocean floor about 15 miles out to sea southeast of Atlantic City. Then a tower with turbine and blades will be bolted to its flanges, rising 906 feet from the ocean at its highest blade tip, putting it in the ballpark of the highest skyscrapers in Philadelphia.

There will be 98 of these turbines in the first installment of offshore wind in New Jersey. The project, known as Ocean Wind I, is owned by global wind developer Orsted and has the capacity to produce 1,100 megawatts of electricity, enough energy to power 500,000 homes annually. It is expected to begin producing power by late 2024 or early 2025.

But Lee Laurendeau, CEO of EEW American Offshore Structures, the company working with Orsted to make the monopiles, is losing sleep over the project. He foresees a precarious situation for New Jersey’s attempt to become a leader in manufacturing and supply chain for offshore wind manufacturing and capture thousands of jobs that go with it.

At issue is a wrinkle in how New Jersey handles new federal tax credits that Laurendeau and wind proponents say could allow New York and other states to grab a big chunk of offshore wind manufacturing — something New Jersey hopes to dominate.

In New Jersey, offshore wind developers can’t take advantage of a big federal tax credit. But the developers say they need that freed-up capital to construct buildings, take loans, and hire more people as planned to make parts.

Laurendeau said New Jersey’s tax-credit issue threatens EEW’s $300 million expansion, planned to provide monopiles for multiple offshore wind installments approved by the state’s Board of Public Utilities. EEW says his company needs the tax credits to make the expansion financially workable.

“Offshore wind has $100 billion of announced projects,” Laurendeau said. “And we have to ask, ‘Do we want $100 billion of those parts coming from across the ocean, or do we want to build them here?’”

A tax-credit snarl

The credits were created under the Inflation Reduction Act of 2022, which allows for a tax credit up to 30% for offshore wind projects that begin construction before Jan. 1, 2026. Credits were also created under the 2020 Stimulus Act.

But a New Jersey law, passed before those acts, states that any such credits must be returned to ratepayers and not used by offshore wind developers. No other state has that requirement. Offshore wind manufacturers say they need the credits because material, labor and borrowing costs skyrocketed dramatically following the pandemic.

Laurendeau wants legislators to come up with a solution fast that allows offshore wind companies can apply for the credits, as they fear missing key benchmarks related to wind projects. Meanwhile, New York is luring supply chain and port infrastructure businesses, including a $350 million offshore wind turbine tower manufacturing facility. General Electric plans to build turbine blades and nacelles, which house gears and drivetrains, in that state.

New Jersey, Laurendeau said, is set to become a manufacturing hub.

“But if you blink,” he warned, “you’re going to lose it.”

On Tuesday, Democratic state Reps. Louis Greenwald and Paul Moriartyintroduced a bill that would “allow qualified offshore wind projects to elect to retain the benefit of the federal tax credits.” The bill states that the federal tax benefits “were established in order to bolster and support the offshore wind industry in response to the COVID-19 pandemic and the unique macroeconomic challenges.” It has been referred to the Assembly budget committee. Democrats control both the Assembly and Senate.

Fading appetite for subsidies

Under Democratic Gov. Phil Murphy, New Jersey has invested $250 million in EEW’s state-of-the-art manufacturing facility, as well as $637 million to build the New Jersey Wind Port in Salem County where turbines can be assembled and shipped. The state also hopes for some parts manufacturing at the site. Overall, New Jersey has committed about $1 billion for offshore wind in subsides and credits, according to the Office of Legislative Services.

But it appears there is little appetite for more, especially among the state’s GOP. Both legislators and the New Jersey Board of Public Utilities are under pressure to ensure that offshore wind doesn’t dramatically increase energy rates for consumers as detractors fear.

“I’m going to have a difficult time supporting any type of future subsidies,” Sen. Paul Sarlo (D., Bergen), chairman of the state Senate Budget and Appropriations Committee, said during a May 23 hearing. “These are large players, international players, who knew what they were getting into when they built these facilities.”

Further, wind opponents have latched onto whale deaths this year as a way to rally people to their cause. Despite experts’ insistence that there is no link between the dead whales and the turbines, some groups have suggested that surveying of the ocean floor for turbines and transmission lines could be impacting whales.

» READ MORE: N.J. whale deaths have sparked right-wing conspiracy theories on Facebook

Offshore wind and jobs

Laurendeau said offshore wind has a multiplier effect on the economy. EEW has contracts with 250 New Jersey-based suppliers for everything from office chairs to equipment. He said that hiring would ramp up in coming years.

“You’re talking suppliers and subcontractors, and all the work here is being done by union contractors,” Laurendeau said. “So it’s probably 1,000 jobs here.” He estimates that the projects would support “probably 4,000 jobs” in New Jersey.

Wind proponents estimate that tens of thousands of jobs could be linked to offshore wind in coming years if the state dominates manufacturing.

Former state Sen. Stephen Sweeney, vice president of the Iron Workers union, wrote the law a decade ago that allowed offshore wind projects to proceed. He said he is concerned that New Jersey’s competitive advantage is close to crumbling.

The Sweeney Center for Public Policy at Rowan University outlined the issue in a recent paper. The center is named after the former senator, who was New Jersey’s longest running Senate president until he lost reelection in 2021. He is chair of the policy center’s advisory board.

“New Jersey has made a big investment,” Sweeney said. “But the manufacturing projects won’t survive. They won’t be able to get them financed. If we don’t move quickly, all these manufacturing jobs are in jeopardy.”

Offshore wind isn’t going away, despite the wishes of opponents, Sweeney said. The federal leases are set, and the U.S. Bureau of Ocean Energy Management has approved a final environmental impactstatement for Ocean Wind I — a major hurdle.

But Sweeney said what stands to be lost is the state’s hope to become a manufacturing hub not only for monopiles, but other components.

EEW American Offshore Structures’ situation is an example, Sweeney said. So far, the company has been importing the big sections for the monopiles from its German parent company and assembling and painting them in Paulsboro. The next phase is to make them from scratch entirely in New Jersey.

Falling behind

EEW has 100 employees in Paulsboro but is a year behind on its second phase of construction, which calls for four new buildings to house plate-cutting and rolling mills and adding 437 permanent workers capable of producing 100 monopiles a year.

That would require buying hundreds of tons of American steel and hiring local employees such as Sha Reed. Reed, who just graduated in May from Rowan University with a degree in construction management, was working in a tile store in the winter when Laurendeau stopped in looking for material for a home project. The two hit it off and Laurendeau eventually hired Reed, who is now helping oversee one of the new buildings, a $300 million project. Reed still finds it hard to believe his luck.

“When an opportunity comes up, you just got to take it,” Reed said, “especially to be part of something so unique and dynamic, right?”

Others in the industry, including Terrence Kelly, a spokesman for Atlantic Shores, also say the need to act is urgent. Atlantic Shores, a joint venture between Shell New Energies and EDF-RE Offshore Development, has an order for 103 monopiles in another wind project approved by the state. The 1,500-megawatt wind farm off Atlantic City would power 700,000 homes. Atlantic Shores is depending on EEW’s Paulsboro expansion, Kelly said.

Both Orsted and Atlantic Shores have another wind farm each approved by New Jersey’s BPU.

“The impact is pretty significant,” Kelly said. “Part of our commitment … was $848 million guaranteed spending in New Jersey. The cascading consequences will require us to either look elsewhere or figure out a novel solution that hasn’t revealed itself yet.”

Published June 22, 2023