The ability of a vibrant offshore wind industry to help the state fulfill its ambitious clean energy goals has been one of Gov. Phil Murphy’s key energy initiatives.
The vision has come with an added economic bonus: By being a leader in the industry on the East Coast, the state could claim a leading role in the manufacturing of the many items — some of which are massive — that are needed to help the sector grow here and elsewhere on the East Coast.
A study released Monday by the Sweeney Center for Public Policy at Rowan University warns the state’s goal to lead in manufacturing may be in jeopardy.
The study, Benchmarking New Jersey on Offshore Wind, said tax-credit issues may hamper the development and completion of the EEW AOS monopile manufacturing facility in Paulsboro, which was announced with great fanfare in December 2020.
The Paulsboro monopile plant was hailed as the first major investment to create a U.S.-based manufacturing facility employing American workers to supply components to the emerging offshore wind industry.
Together, the Paulsboro facility, with $250 million in pledged funding, and the New Jersey Wind Port, being built by the New Jersey Economic Development Authority with $637.7 million in funding as a manufacturing, assembly and staging facility on Delaware Bay in Salem County, were touted as the one-two punch that would make New Jersey the national leader in the offshore wind industry.
Rising costs connected to supply-chain issues — plus efforts by other states — are two of the biggest challenges.
The biggest issue, however, may be the use of tax credits.
The report said New Jersey is currently the only state that does not allow full use of the federal tax credits by offshore wind developers. Existing state regulations require that tax benefits obtained by offshore wind projects after submitting their Offshore Wind Energy Certificate price to the Board of Public Utilities be returned to the ratepayer.
Sweeney, the former New Jersey Senate president who chairs the policy center’s advisory board, said that placement no longer is assured.
“Competition between states and companies is increasingly intense,” he said. “With New York allowing Ørsted to use federal offshore wind tax credits, we need to do the same to make sure that the EEW AOS monopile manufacturing facility in Paulsboro is able to expand, increase union jobs and supply our offshore wind farms with American-made components.”
Phase 1 of the project created approximately 100 jobs at the facility. More are supposed to be coming.
The report said the EEW AOS facility already is more than a year behind schedule on its planned Phase 2 development — the construction of four buildings, including plate-cutting and rolling mills, that would add 437 permanent manufacturing jobs and transform Paulsboro into an industry leader capable of producing up to 100 finished monopiles per year.
Sweeney Center Director Mark Magyar, the report’s author, said the study should be viewed as a reminder of what could happen moving forward.
He put New Jersey’s offshore wind development efforts in national context, saying that the state’s role as the leader in supply chain, manufacturing and port infrastructure investment is not assured.
“Gov. Murphy set the most ambitious offshore wind target in the nation and his administration has been particularly aggressive in requiring companies to invest in New Jersey projects as a condition of power purchase agreements,” Magyar said. “What is at risk is the future of the EEW AOS monopile plant, which was the first major private sector investment in creating a U.S.-based manufacturing industry to supply the offshore wind industry.”
To read the complete report and its assessments, click here.