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Second New Jersey Offshore Wind Solicitation Questions and Answers

Questions submitted regarding the solicitation will be collected, answered, and posted here by the BPU. Questions and answers posted are available for all to see. Please note that these answers are the opinion of Board Staff and should not be construed as opinions or rulings of the Board.

Questions will be accepted until 5PM EST on November 13, 2020.

Submit questions by email to nj-osw-2020@levitan.com with the subject line "NJ OSW Question" and cc osw.stakeholder@bpu.nj.gov.

The responses provided herein are merely Board Staff's attempt to be responsive to the questions and should not be interpreted as legal advice. Applications must abide by (i) the Board's September 9, 2020 Order, In the Matter of the Opening of Offshore Wind Renewable Energy Certificate (OREC) Application Window for 1,200 to 2,400 Megawatts of Offshore Wind Capacity in Furtherance of Executive Order No. 8 and Executive Order No. 92, Order Opening the Application Window for the Second Offshore Wind Solicitation, Docket No. QO20080555; and (ii) the September 10, 2020 New Jersey Offshore Wind Solicitation #2 Solicitation Guidance Document Application Submission for Proposed Offshore Wind Facilities ("Solicitation Guidance Document").

1. QUESTION: Section 1 of the draft Solicitation Guidance Document refers to a number of factors that could influence the timing and quantity of OREC awards, which could differ from the schedule set forth in Table 1. One factor notes the possibility of awarding ORECs between 1,200 and 2,400 MW for this solicitation. Can the NJBPU clarify the circumstances where these factors might be applied? Clarification allows Applicants the ability to put forth their strongest effort in achieving a maximum award in their Application by providing a better sense of what the ultimate award might be for this solicitation.

RESPONSE:
The factors listed in the Solicitation Guidance Document in reference to Table 1 were considered in developing the requirements of this solicitation for awarding ORECs for 1,200 to 2,400 MW.

2. QUESTION: N.J.A.C. 14:8-6.6(f) of the OREC Funding Mechanism, which is referred to in Section 1.1 and Attachment 5 of the Solicitation Guidance Document, provides for a three-month holdback of PJM revenues. In the event of an EDC failure to pay, the three-month holdback gives security for Project finance investors to make full and timely payment of ORECs up to the OREC allocation pursuant to the Board Order. Will the NJBPU should consider how to increase the amount of the holdback (absent a lengthy regulatory amendment process) in the event the EDC failure to pay is of such a magnitude that a three-month holdback is insufficient to cover scheduled OREC revenue (ex: petition to waive the applicable regulation)? This will help reduce uncertainty on the offtake structure and seek better financing terms, which should ultimately benefit the ratepayer.

RESPONSE:
The BPU will not be making any changes to the holdback provision.

3. QUESTION: Section 1.2 states that "The Board reserves the right to select less than 1,200 MW or more than 2,400 MW, if circumstances warrant." Footnote 20 states that "Projects greater in size than 2,400 MW will be accepted if the addition of the final turbine results in a total nameplate capacity greater than 2,400 MW." Are there any other circumstances, beyond where the final turbine results in a total nameplate capacity of greater than 2,400 MW, where the Board would consider a project in excess of 2,400 MW?

RESPONSE:
There are no other circumstances where the Board would consider a project in excess of 2,400 MW.

4. QUESTION: Can the NJBPU clarify what constitutes Commercial Operation, i.e. what will trigger the first OREC payment of a given project phase? For example, will COD be 'approved' and OREC payment start as early as testing / commissioning of any turbine, or only once a certain number of MWs (phase 1 total MWs) are fully operational? In the latter case, will the NJBPU expect any market revenues associated with production during testing / commissioning be returned to the ratepayer? (Section 1.2)

RESPONSE:
As defined in N.J.A.C. 14:8-6.1, commercial operations date (COD) means the date upon which a qualified OSW project, or a phase of a qualified OSW facility, which is interconnected to the transmission system in New Jersey, begins to generate power for which it is eligible to receive ORECs.

~~All revenues generated by the Project before or after the specified 20-year OREC period shall be returned to ratepayers, as well as all revenues generated during the OREC period.~~ Response updated on 11/30/20 to remove this statement per Q&A no. 27.

5. QUESTION: As the NJBPU uses an irrevocable Board Order approach for the OREC award, as opposed to an approach utilized by other states with a negotiated power purchase agreement, can the NJBPU commit to provide successful Applicants with a draft Board Order to review and provide comments on before a final Board Order is issued? (Section 2.5)

RESPONSE:
Applicants that are awarded Projects will not have the opportunity to review the draft Order.

6. QUESTION: In addition to the previous question, due to the OREC Board Order structure differing from the standard negotiated power purchase agreement, can the NJBPU clarify how right of default (incl. cure periods and remedies) will be governed? Additionally, can the NJBPU provide clarity on any mechanism short of entitlement termination, through which a successful Applicant may work through a Board Order default? This would help reduce uncertainty on the offtake structure and seek better financing terms, which should ultimately benefit the ratepayer. (Section 2.5)

RESPONSE:
The Offshore Wind Economic Development Act (OWEDA) provides that a Board order awarding ORECs "shall not be modified by subsequent board orders, unless the modifications are jointly agreed to by the parties." N.J.S.A. 48:3-87.1(c)(4). For the total annual OREC allowance for a qualified offshore wind project, the rules provide that, "once approved by the Board, shall not be subject to reduction or modification during the term of each OREC order unless otherwise agreed to by both parties." N.J.A.C. 14:8-6.6(a)(2). PJM revenues shall be available for use by any qualified offshore wind project to "[c]over OREC payments during the resolution of an event of EDC default, under-payment, or non-payment by the payment agent." N.J.A.C. 14:8-6.6(f)(7)(ii).

7. QUESTION: Section 2.5 of the Solicitation Guidance Document refers to a final Board Order. Can the NJBPU please clarify, if more than one Applicant receives an award, will there be separate Board Orders? This is relevant because Section 3c of OWEDA requires any Board order modification to be agreed to by all parties, which would be difficult across successful Applicants. In addition, investors in projects typically require approvals to be specific to the deal being financed. The theoretical possibility of cross default among unrelated projects may be unworkable, and at a minimum adds unnecessary risk and cost.

RESPONSE:
Staff will continue to seek feedback from developers to ensure that the awards are financeable. Staff's current intent is to propose that the Board utilize a single Order, regardless of the number of awards. However, if awards are made to more than one applicant, specific terms and conditions for each applicant will be attached to the Order as an appendix. Staff would also propose to clarify that modifications to each awardee's respective appendix would not require the input or agreement from any other concurrent awardee not pertinent to the respective appendix.

8. QUESTION: With regards to the requirement that "The Applicant shall disclose, in detail, any prior business bankruptcies, defaults, disbarments, investigations, indictments, or other actions against either the Applicant, its parent company, affiliates, subsidiaries, or any key employees identified above (N.J.A.C. 14:8-6.5(a)(1)(iv))," can the NJBPU confirm that disclosure of those elements that are material and are limited to the applicable project company and the entities in the direct ownership chain will be considered sufficient to meet this requirement? Otherwise, the question becomes extraordinarily difficult for companies with varying levels of interest in numerous "affiliates," and bankrupt remote project companies, which have no bearing on the resources of the Applicant project company or direct up stream members. (Section 3.1)

RESPONSE:
An Applicant, as part of its Application, may request a waiver of certain administrative provisions of the OWEDA regulations and explain the reasons for the request, in accordance with N.J.A.C. 14:1-1.2, but must expressly state that, in the event the Board denies the waiver request, the applicant would fully comply with the applicable Board regulations. It is at the Board's discretion whether to approve a request for a waiver even if well supported.

9. QUESTION: Can the NJBPU clarify if NJ-produced components supplied to projects delivering energy to other States will be considered as NJ economic benefits, whether they are supplied to an affiliate of the Applicant / project or to third parties in other States? This approach would enable a surer path to establishing strong manufacturing capabilities in New Jersey, via a more significant book of orders for NJ suppliers. (Section 3.8)

RESPONSE:
Economic benefits can be included if they accrue to New Jersey, that is, if the jobs and spending associated with the activity will occur in and benefit New Jersey.

10. QUESTION: The NJ Wind Port (NJWP) presents a formidable opportunity for Applicants to submit projects with high NJ economic benefits. We do note the government website states three items that will be perceived as risks for Applicants interested in incorporating the NJWP in their Application:

The $300-$400M State financing is not in place yet;
The NJWP plans 2 phases of construction, with different timing for marshalling and manufacturing facilities (2023 v. 2024-2026); and
The NJWP may be available for out of State offshore wind, in addition to NJ's 7.5 GW, but lists no priority for NJ projects.

Can the NJBPU to provide clarity on (1) how they will evaluate Applications that include an Economic Development Plan relying on the NJWP, (2) how the NJBPU will ensure that Applicants are not adversely prejudiced on the economic development evaluation criteria should the NJWP-related facts change from the time of submission prior to OREC award; and (3) how the NJBPU may provide relief for Applicants awarded an OREC Order which parameters are dependent upon the NJWP if the port development is delayed or otherwise impacted? (Section 3.8)

RESPONSE:
1) The evaluation criteria and the evaluation process for the economic development plan will not change based on the inclusion of the New Jersey Wind Port (NJWP).

2) and 3) The NJBPU fully expects the New Jersey Wind Port to be developed as currently planned. However, as with any proposed port facility, if NJWP-related facts change from the time of submission either prior to or subsequent to award, the NJBPU will not provide specific relief for Applicants. Applicants may structure their guarantees for economic benefits to address these potential issues. The level of guarantees will also be considered.

11. QUESTION: Can the NJBPU clarify whether the Section 14 (N.J.A.C. 14:8-6.5(a)(7)(vi)) requirement for Applicants to deliver a proof of insurance refers to the Operations and Maintenance phase (which will only be available around Commercial Operation) or the current project phase? (Section 3.14)

RESPONSE:
The Applicant should provide proof of an appropriate level of insurance that is currently in place for each phase, and describe anticipated insurance policies for future project phases.

12. QUESTION: In view of the amount of the associated commitment and its impact on project economics and risk profile, can the NJBPU provide additional information on the timing and form of the segregated decommissioning funds that shall be required per N.J.A.C. 14:8-6.5(a)(9)(ii)? (Section 3.15)

RESPONSE:
Segregated decommissioning funds should be provided in the form of a letter of credit or corporate guarantee that is reasonably satisfactory to Staff. For example, Staff would consider irrevocable parent guarantees from creditworthy entities, with a third-party guarantee to be provided if the corporate parent's credit rating drops below investment grade.

13. QUESTION: We appreciate the inclusion of the diversity criteria giving the NJBPU, "the ability, but not the requirement, to reflect in its evaluation the diversity of selected Applicants, technology types and wind resource locations." Can the NJBPU clarify further by (1) providing context to Applicants as to when the NJBPU may or may not use such criteria in its evaluation and (2) confirming whether the NJBPU would, if applicable, apply these criteria within a single procurement, or across the 7.5 GW sought by the offshore wind program, or both? (Section 4)

RESPONSE:
Each Project will be evaluated individually, applying the criteria as shown in Table 3 of the Solicitation Guidance Document. The Board may elect to apply the diversity criteria in a manner that confers the most benefits to New Jersey.

14. QUESTION: We appreciate the NJBPU's transparency on providing weighted criteria and a detailed view of the selection process. Could the NJBPU provide additional detail on (1) the role of the ratepayer advocate in qualifying a reasonable ratepayer impact in the eyes of the NJBPU (not mentioned) and (2) sub-weighting for these criteria that are combined in Table 3, namely OREC Purchase Price and Ratepayer Impacts, and Economic Impacts and Strength of Guarantees for Economic Impacts? (Section 4)

RESPONSE:
1) New Jersey Division of Rate Counsel will be an integral part of the evaluation process and the level of involvement will be comparable to the first solicitation; 2) No additional detail on the sub-weighting will be provided.

15. QUESTION:

Can the NJBPU clarify whether they are expecting applicants to provide their forward curves for energy, capacity, and RECs (vs. the Round 1 Solicitation Standardized Inputs provided by the NJBPU)?
If yes, can the NJBPU clarify whether they expect the energy price forecasts to be at the Point of Interconnection or at the nearest Hub?
How, if at all, will applicant-provided forward curves be used in evaluating the proposals? Will the NJBPU be using standard market assumptions to compare applicants' projects head to head?
Additionally, can the NJBPU confirm, if the response to (1) above is affirmative, that these applicant-provided forward curves are used by the NJBPU 'for information' only, and will in no way be binding upon a qualified applicant and project (i.e. will not become an applicant's commitment to the future energy, capacity, and RECs prices)?
Finally, can the NJBPU clarify if the Project Revenue Plan is expected to be a working excel sheet (with calculations embedded) or if the simple output of the analysis is sufficient?

(Application Form, Section 3.4 Financial Analysis, 3.7 Project Revenue Plan and Strategy)

RESPONSE:

Yes, Applicants must provide their forward curves for monthly energy prices, Energy Year capacity prices, and Energy Year REC prices on the "Revenues" worksheet of the Application Form.
Energy prices should reflect the pricing point for revenues that will be returned to customers.
BPU will consider the forward curves provided by Applicants but will ensure that all Applicant's proposed OREC prices will be consistently evaluated.
BPU can confirm that the prices provided in the Application Form will not be binding on Applicants.
The "Revenues" worksheet in the Application Form is a working Excel spreadsheet that calculates expected revenues based on Applicants' input. Separately, Section 7 of the Application Narrative must address each item listed in Section 3.7 of the Solicitation Guidance Document, and may reference the calculations in the Application Form. The Applicant may provide additional supporting detail in the form of an Excel spreadsheet.

16. QUESTION: Can the NJBPU clarify if they could select several projects within a single application? (Section 2.4)

RESPONSE:
The Board reserves the right to select more than one Project from an Application. Projects may not be contingent on the selection of another Project. Applicants should specify in the Application Narrative whether more than one of the submitted Projects can be selected independently, and which Projects can be selected together, and which Projects are mutually-exclusive.

17. QUESTION: The Solicitation Guidance Document appears to allow for an applicant to propose a portfolio of projects (Section 2.4 "Throughout the evaluation process, the BPU will gauge the impact of Project size, or the size of a portfolio of Projects, on all evaluation criteria."). The Solicitation Guidance Document clearly allows for a single project to be undertaken in multiple phases. There are significant project finance requirements and advantages to having each project in a portfolio, and/or each phase within a project to be owned by a distinct project company, which is typically a special purpose entity. However, the Solicitation Guidance Document only contemplates a single applicant per application.

If the Project Financing Plan (3.5) provides a detailed description of the identity, proposed rights and obligations, and relationship of affiliated project companies, may a single affiliated applicant submit an application for a portfolio of projects, or a multi-phased project, with each project or phase therein to be subsequently owned by discrete affiliated project companies?

If yes, and if the NJBPU were to select such a portfolio of projects or a multi-phased project, would the OREC award order will then include and name each of the affiliated project companies included in the application as a "Qualified Project"?
If answer to (1) is affirmative, may each separate project within the portfolio and/or project phase have distinct rights and obligations, such that the failure of one project or phase of the project would not impact the OREC award to other affiliated project companies in connection with other projects or phases?
If answer to (1) is no, then, if that result is desired by the Applicant, must each project company project owner submit a separate application for each project, even though many parts of the applications would overlap and be substantially similar?
If the answer to (3) is yes, would each such application be subject to the $500,000 application fee, even though many parts of the applications would overlap and be substantially similar?

(Section 2.4)

RESPONSE:
The reference to a portfolio of Projects in Section 2.4 is intended to be to a total portfolio of awarded Projects, not a portfolio of Projects from a single Applicant. However, as noted in the response to Question #[16] above, Applicants can indicate in the Application Narrative whether any of the submitted Projects can be selected together, i.e., they are not mutually exclusive.

Separate owners for phases within a single Project are discouraged unless the Applicant provides a compelling benefit to ratepayers if phases are owned by separate entities. If an Applicant proposes separate owners for each phase, the Board will require that (1) the relationships among the relevant entities are clearly defined, and (2) the Project can be managed and executed as a single Project from the BPU's perspective.

In such a case, each of the affiliated Project companies would be included in the Board Order.
The BPU intends to consider each awarded Project separately so that failure of one Project would not impact the OREC award of another separate Project.
Based on the responses above, this question is not applicable.
Based on the responses above, this question is not applicable.

18. QUESTION:

In the event a portfolio of projects is submitted by an applicant in a single application, may the applicant make its commitment to a particular project contingent upon the BPU selecting or not selecting other projects in the portfolio? For example, may the applicant specify that any or only certain combination(s) of projects may be selected by the BPU?
If the response to (1) is affirmative, can the Applicant make its OREC Price or Economic Benefit claim contingent upon the selection of another project of the portfolio?

(Section 2.4)

RESPONSE:
See the response to Question #16.

19. QUESTION: The Economic Development Plan (3.8) of an applicant must refer to its plan to use union labor, including union neutrality agreements. Is the applicant's determination whether to utilize a union neutrality agreement reflected in the evaluation criteria?

If yes, in which criterion is it reflected?
If yes, please clarify the meaning of union neutrality agreements, as these agreements are not typically seen by a project developer, where all the construction will be performed by third-parties overseen by the project developer. Or is the intent of this provision to determine if the project developer will require that third party contractors and/or vendors have union neutrality agreements in place as a condition of receiving work or services on behalf of the project developer?
Please confirm that if no union neutrality agreements are contemplated to be required of third-party contractors and/or vendors, that such position does not make the application non-conforming.

(Section 3.8)

RESPONSE:

The neutrality agreement is part of the labor plan, which in turn is part of the economic plan, thus it would be considered as part of the section that weighs Economic Impacts and Strength of Guarantees for Economic Impacts and/or Likelihood of Successful Commercial Operation.
Union neutrality agreements mitigate risks due to a possible strike or other labor dispute resulting in interference with the private entity contracted to install or operate and maintain a wind project, unnecessarily delaying the critical delivery or operation and maintenance of the project. Union neutrality agreements also mitigate risks due to possible private labor cessation which could result in excessive costs making the wind projects less commercially viable. Union neutrality agreements make possible legally enforceable guarantees that construction, operation and maintenance will be carried out in an orderly and timely manner, without strikes, lock-outs or slowdowns and also provides for a peaceful, orderly and mutually binding procedures for resolving labor issues, thus promoting harmonious and productive work environments. Specifically union neutrality agreement means "an agreement between a developer's contractors (or subcontractors) and one or more labor organizations that requires its members agree to refrain from strike, work stoppage, slowdown or other job action and that the contractors or subcontractors agree to maintain a neutral position with respect to efforts by the labor organizations to represent the contractor's or subcontractor's employees."
A union neutrality agreement is only one potential component of an applicant's labor plan.

20. QUESTION: Section 3.13 Permitting Plan, specifies that:

Attachments to Section 13 of the Application Narrative must include the following information required under N.J.A.C. 14:8-6.5(a) et seq.:
- Copies of all submitted permit applications and any issued approvals and permits (N.J.A.C. 14:8- 6.5(a)(10)); and
- Filings made to any other regulatory or governmental administrative agency including, but not limited to, any compliance filings or any inquiries by these agencies (N.J.A.C. 14:8-6.5(a)(10)(ix)); and
Applicants shall provide the Board with copies of each permit or approval within 14 days of receipt by the Applicant. This is a continuing obligation upon the Applicant and shall serve as a condition of any OREC award (N.J.A.C. 14:8-6.5(a)(10)(iii)).

Our understanding of the above is that (1) Applicants should include copies of all permit applications or approvals as well as filing submitted / received prior to the Submission Deadline and (2) past this Submission Deadline, awarded Applicants should submit copies of permits or approvals once received (i.e. not copies of the applications) to the NJBPU. Can you please confirm if our understanding is correct?

RESPONSE:
Permit applications, approvals and other filings that are available prior to the Submission Deadline must be included in the Application. If Applicants receive permits or approvals after the Submission Deadline, copies of those permits or approvals must also be submitted to the BPU. Copies of permit applications that are submitted after the Submission Deadline are not required to be submitted to the BPU, although Applicants are encouraged to submit them as an indicator of progress.

Instructions for submitting permits and approvals received after the Submission Deadline will be posted to the solicitation website following the Submission Deadline.

21. QUESTION: We understand that the "proposed nameplate capacity for the entire Project" is the product of the number of turbines by their nameplate capacity. Turbine suppliers typically offer options for additional capacity when certain operating conditions are met, allowing for an increased output at the turbine level (up to 5% typically). However, project output could be limited to the project nameplate capacity at the Point of Interconnection to not exceed it in case of option activation.

Can the NJBPU confirm if, in preparing their application, applicants should use the nameplate capacity that is featured on the turbine type certificate, i.e. standard nameplate capacity with no option activated?
After a project is qualified and receives an OREC Order, would the activation of such an option be considered a change of nameplate capacity, i.e.. substantial enough to require Board approval?

(Section 3.17)

RESPONSE:

In preparing their Application, Applicants should use the nameplate capacity that is featured on the turbine type certificate, i.e., standard nameplate capacity with no option activated.
Activation of such an option would not be considered a change of nameplate capacity that would require Board approval.

22. QUESTION: Can links be submitted instead of attachments for financial statements?

RESPONSE:
Applicants may submit audited financial statements using a web-based link rather than uploading a PDF file, as long as the linked files meet the file requirements, i.e., searchable PDFs. This authorization to provide links instead of attachments does not extend to other document types unless explicitly authorized by Staff in future Q&A. (Section 3.2)

23. QUESTION:

If a project's COD is delayed and commissioned a year after the anticipated COD, can you please confirm the OREC price of the subsequent year will apply to the first year of production?
Given the 20-year tenor of the OREC term, what OREC price will the BPU apply for the last year of production if the above COD delay scenario occurs? Can we assume that the proposed escalator will be automatically applied for the full 20 year tenor?

(Section 3.17)

RESPONSE:

Confirmed. OREC prices are by Energy Year, regardless of COD.
Confirmed. The escalator will be applied over the full 20-year Contract Term.

Note that the treatment of OREC prices described above applies only for project delays approved by the BPU. Delays not approved by the BPU will result in an OREC period shortened by the length of the unapproved delay.

24. QUESTION: Can the BPU clarify why it seeks a forecast of REC prices during the OREC term, and references "revenues anticipated by the sale of RECs" in the revenue plan sections of the Application requirements? Since OREC obligations are a component of Class I renewable energy requirements, shouldn't Applicants assume no REC revenue (apart from ORECs) until the conclusion of the OREC term? (Section 3.7)

RESPONSE:

The BPU has requested a forecast of REC prices during the OREC term primarily to understand the Applicant's market view.
While most REC revenue to be realized by the successful Applicant will occur after the OREC term ends, some REC market revenue may occur prior to COD and for the sale of any energy above the Annual OREC Cap.

25. QUESTION: The TSUC cost sharing mechanism provides that "Buyer will be responsible for 100% of TSUC greater than the Tier 3 Cost Limit. The Buyer's Share of the TSUC and resultant increase, if any, to the OREC Purchase Price will be determined after PJM has finalized the TSUC calculations for an awarded Project". Can the BPU clarify the conditions for the OREC Purchase Price adjustment? Will PJM's TSUC calculations be considered "finalized" as of the Interconnection Agreement Execution, or after the System Upgrades have fully been executed (construction complete)? (Section 3.17)

RESPONSE:

The BPU reserves the right to exercise its discretion regarding the calculation of the OREC Purchase Price Adjustment. Final price adjustments will be based on actual construction costs upon completion of all transmission system upgrades delineated in the Interconnection Service Agreement (ISA).
The TSUC calculations will be based on the actual construction costs, and the Tier Cost Limits and Seller Shares as submitted in the Application.

26. QUESTION: Can the BPU confirm whether the TSUC, defined in Section 3.12 footnote 50 as "The onshore transmission owner upgrades necessitated by the Project's interconnection request (...) include the offshore substation and all associated facilities up to the transmission owner's point of interconnection" should include all of: the Direct Connection Network Upgrades, the non-Direct Connection Network Upgrades and the System Upgrades? If not all, but only some of these 3 components should be included, can you please clarify which?

RESPONSE:
The TSUC includes System Upgrades, but does not include physical Attachment Facilities (Direct Connection Network Upgrades and Non-Direct Connection Network Upgrades).

27. QUESTION: In Q&A no. 4, the BPU states that "All revenues generated by the Project before or after the specified 20-year OREC period shall be returned to ratepayers, as well as all revenues generated during the OREC period." Can the BPU confirm whether revenues generated before or after the 20-year OREC period must in fact be returned to ratepayers?

In several locations, the applicable regulations require that "all project revenues" be refunded to ratepayers. "All project revenues", as defined in the regulations, "shall mean all revenues generated by a qualified offshore wind facility, during the 20-year term of the Board Order, resulting from the sale of energy, capacity, or any ancillary service in PJM, or any other revenue that is generated by a qualified offshore wind facility." That definition expressly limits the applicable revenues to be refunded to ratepayers as those generated during the 20-year term of the Board Order. As such, our understanding is that any revenues pre-OREC term and post-OREC term shall remain with the Project.

Please confirm whether our understanding is correct. For the avoidance of doubt: Please note that both the pre-OREC term and post-OREC revenues; although by no means the main revenue line of any wind farm do enable applicants to bid a competitive OREC strike price and as such already contribute to the minimization of ratepayer impact.

RESPONSE:
The stated understanding is correct. "All project revenues" refers only to revenues during the 20-year term of the Board Order, not revenues over the project's operational life. All revenues before and after the 20-year term shall remain with the Project. The response to Q&A No. 4 has been corrected accordingly.

28. QUESTION: The commercial operations date (COD), per in N.J.A.C. 14:8-6.1, is defined as "the date upon which a qualified OSW project, or a phase of a qualified OSW facility, which is interconnected to the transmission system in New Jersey, begins to generate power for which it is eligible to receive ORECs".

However, this does not clarify the exact conditions triggering COD. Is it expected that the Project will submit a COD declaration to the BPU when the windfarm reaches a minimum threshold of wind turbines commissioned and able to generate power? Examples seen in other State procurements define 80% or 90% of turbines for one specific COD phase as a threshold.

Additionally, pursuant to question [28], if the 20-year term of the Board Order is not yet started, because COD is not yet reached, revenues associated with the energy generated during the testing and commissioning period (prior to meeting all conditions triggering COD, as mentioned above) would presumably remain with the Project and not be required to be refunded to ratepayers. This is customary in other State procurements, and the definition of "all project revenues" referenced above, as it encourages Projects to optimize the commissioning phase, reducing costs and risks of delays that would otherwise be priced into the OREC bid price.

RESPONSE:
COD may be declared once at least 90% of the wind turbines in a phase are commissioned and generating power.

29. QUESTION: In Q&A no. 12, the BPU clarified that "Segregated decommissioning funds should be provided in the form of a letter of credit or corporate guarantee that is reasonably satisfactory to Staff". However, the BPU did not clarify at what time the letter of credit or corporate guarantee would be due. Is it a fair assumption that the BPU expect this security to be in in place at the start of physical offshore construction?

RESPONSE:
The Applicant will be required to meet the decommissioning fund requirements consistent set forth in BOEM's Renewable Energy Program Regulations (30 CFR 585).

Full text of the regulations can be found at: https://www.boem.gov/sites/default/files/uploadedFiles/30_CFR_585.pdf. See sections 585.515 to 585.517 on page 524 (page 40 of the linked file)

30. QUESTION: In relation to the emission impact analysis, Sec. 3.9 and the relevant regulations require a proposer to provide (a) "The anticipated CO2 emissions impact of the Project (N.J.A.C. 14:8-6.5(a)(8)," and (b) "Provide information regarding the direct emissions impacts of the Project, including CO2, SO2, and particulate matter ("PM2.5"), as well as other relevant environmental impacts, such as impacts on the marine environment (N.J.A.C. 14:8-6.5(a)(11)(xiv)(3))."

Could the NJ BPU please clarify if there is a difference between "anticipated emissions" and "direct emissions" for the purposes of these two requirements? The Applicant understands both to refer to the emissions directly attributable to the project. If there is a difference, could the NJ BPU provide their understanding of how these two requirements should be interpreted for the purposes of each required analysis?

RESPONSE:
"The anticipated CO2 emissions impact of the Project" means the difference between (a) the CO2 emissions that are avoided annually by the Project through the displacement of fossil generation and (b) the direct emissions produced annually from vehicles, vessels, and machinery during development, construction, operation, and decommissioning of the Project. The regulations seek the same information for CO2, SO2, and particulate emissions.

31. QUESTION: In relation to the emission impact analysis, Sec. 3.9 and the relevant regulations require a proposer to "Provide information regarding the Project's direct emissions of NOx during the development, construction, operation, and decommissioning of the Project that is consistent with the emissions impacts reported in the Application Form, including a full accounting of emissions produced from vehicles, vessels, and machinery."

Could the NJ BPU please clarify that the approach to NOx described in this requirement is the same as the approach that is described under the requirement listed as [31(b)] above, with the additional focus on emissions from vehicles, vessels, and machinery in the case of the NOx analysis? If not, could the NJ BPU please clarify how the approach is different?
Could the NJ BPU please confirm the intended scope of the analysis? The Applicant understands the requirement to include construction, operation, and decommissioning and not emissions upstream of these activities.

RESPONSE:

The Applicant is instructed to provide the same information for NOx as explained for CO2, SO2, and PM2.5 in the responses to Q&A no. 31.
The scope of the analysis should include direct emissions during development, construction, operation, and decommissioning, and not emissions upstream of these activities.

32. QUESTION: In relation to the emission impact analysis, Sec. 3.9 and the relevant regulations require a proposer to "Provide an assessment of environmental impacts from the Project compared to other similar Class I renewable energy projects (N.J.A.C. 14:8-6.5(a)(11)(xiv)(4))."

Given the differences between offshore wind projects and other types of Class 1 renewable energy projects, can the NJ BPU clarify how an Applicant should quantify the impact of Class I renewable energy projects?

RESPONSE:
The Applicant is asked to compare the environmental impacts between an offshore wind project and onshore projects based on Class 1 eligible technologies. The comparison is not limited to emissions impacts, and may be qualitative and/or quantitative.

33. QUESTION: In relation to the emission impact analysis, Sec. 3.9 and the relevant regulations require a proposer to provide (a) "Environmental impacts (direct and comparative) must be quantified to the extent that they are significant and it is possible to quantify them (N.J.A.C. 14:8-6.5(a)(11)(xiv)(5))," and (b) "The comparative environmental impacts shall be monetized, to the extent possible, for evaluation as part of the overall cost-benefit analysis (see Section 3.16) (N.J.A.C. 14:8- 6.5(a)(11)(xiv)(6))."

Could the NJ BPU please confirm that the reference to "comparative" in the requirements above is intended to refer to the comparison to other Class 1 renewable energy projects, as referenced in [33(a)] above? If not, can the NJ BPU please clarify what is meant by "comparative" in this context?

RESPONSE:
"Comparative" environmental impacts refers to the emissions impacts that are avoided by the addition of the Project, compared to a future where the Project is not built, referred to elsewhere in the Solicitation Guidance Document as "avoided emissions."

34. QUESTION: In relation to the emission impact analysis, Sec. 3.9 and the relevant regulations require a proposer to provide "A description of how the direct and avoided emissions of the Project, as reported in the Application Form, were calculated, including all assumptions used in preparing estimates of direct and avoided emissions"

Could the NJ BPU please confirm that the reference to "avoided emission" in the requirement above is intended to refer to the emissions of other generators the project is expected to displace? If not, can the NJ BPU please clarify what is meant by "avoided emissions" in this context?

RESPONSE:
"Avoided emissions" refers to emissions from other generators that the proposed Project is expected to displace.

35. QUESTION: In 2018, the NJ BPU provided standard inputs to be used by applicants for the purposes of the cost-benefit analysis that each applicant must submit. The Solicitation Guidance Document for the 2020 solicitation, however, does not provide standardized inputs, such as guidance regarding price forecasts or the calculation of revenues over the life of the project.

Could the NJ BPU please confirm whether applicants are required to use any standardized inputs for the purpose of their cost-benefit analysis for the 2020 solicitation?
If not, could the NJ BPU please confirm whether the guidance provided in the Standardized Inputs for Cost-Benefit Analysis applies and can be relied upon by applicants for the purposes of the 2020 solicitation?

RESPONSE:

Applicants should use a 7% nominal discount rate and a 2% general inflation rate for escalating real-value projections. Unlike the 2018 OREC procurement, the BPU is not providing other common methods or assumptions for the cost-benefit analysis. Instead, applicants are to provide valuations of their choice. The methods and assumptions used should be supported by a detailed description of what was done, together with work papers that will allow evaluators to reproduce the analysis. Note that the BPU will independently conduct its own cost-benefit analyses using a common set of methods and assumptions across all proposed projects.
Applicants are free to use any aspect of the 2018 Standardized Inputs for Cost-Benefit Analysis document, other than the required nominal discount rate and general inflation rate assumptions.

36. QUESTION: Following up on Q&A no. 22, and considering the (1) Solicitation requirement that "Unless specifically required to be provided in a different format such as Excel, attachments should be consolidated for each section of the Application Narrative into a single searchable PDF file with numbered pages, with the file name "Attachments to Section [#]." and (2) 100 MB file size limit, can the BPU confirm that the below would be acceptable:

For Sections where heavy attachments (example: visual simulations) or a large combination of attachments are required, submission of several PDF consolidated files (example: Attachments 1 of 3 to Section [#]).
Full visual simulations per Section 3.9 requirements via a web-based link to a video, which would allow for a continuous viewing experience rather than static images.

RESPONSE:
Yes, both approaches are acceptable. In the latter example, please ensure that any linked video files can be downloaded.

37. QUESTION: Can the BPU clarify (1) if the $10,000 per MW funding to provide financial and technical support to research initiatives and the regional monitoring of wildlife and fisheries related to the introduction of offshore wind projects is intended as a one-time payment and (2) is due prior to, at COD or during the operation period, and if so, with what payment schedule? (Section 3)

RESPONSE:
Applicants are required to provide payment to the State of New Jersey for research initiatives and the regional monitoring of wildlife and fisheries related to the introduction of offshore wind projects in the following schedule: 50% of the $10,000/MW fee within 90 days of award, and the remainder paid in equal annual installments on the anniversary of the award over a 2-year period. The funding will be administered by the NJDEP and BPU, with stakeholder input from the selected Applicant(s), research institutions, industry, regional monitoring organizations and members of the New Jersey Offshore Wind Environmental Resources Working Group to aid in the identification and prioritization of regional research and monitoring needs.