Clean Power Professionals Group
This special interest group is for professionals to connect and discuss all types of carbon-free power alternatives, including nuclear, renewable, tidal and more.
- Mar 30, 2023 7:52 pm GMT
Could Inflation Upend Clean Energy Deployment?
New Jersey has a stated goal of becoming the epicenter for offshore wind. Governor Murphy has signed an executive order that sets the state’s offshore wind goal at 11 gigawatts by 2040. That’s enough energy to power over 8 million homes.
The problem is that projects of this scale take many years to complete and inflation presents a major risk to the project’s investors. Two wind solicitations have already been completed, but a third remains in process. State officials were considering allowing developers to add a price escalator based on inflation.
According to New Jersey’s Division of Rate Counsel, if such a provision were included in the previous solicitations it might had added $5 billion in electricity costs over 20 years.
The natural reaction is that would be bad. But if developers perceive that inflation risks make the proposed projects unprofitable, they could walk away altogether. And that wouldn’t be good either.
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