It was revealed last night that Ørsted, the winner of two bids to build 1,100-megawatt wind farms off the New Jersey coast, is officially pulling the plug on the projects, citing macroeconomic factors.
The Danish company, the world’s biggest offshore wind developer, made the announcement prior to an earnings call in Denmark scheduled for today.
The decision is expected to have huge ramifications for the state’s clean-energy goals.
“Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” Gov. Phil Murphy said. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.”
The governor added that the state was working with Ørsted on the economic issues that come with such projects.
“In recognition of the challenges inherent in large and complex projects, my administration, in partnership with legislative leadership, insisted upon important protections that ensure New Jersey will receive $300 million to support the offshore wind sector should Ørsted’s New Jersey projects fail to proceed. I have directed my administration to review all legal rights and remedies and to take all necessary steps to ensure that Ørsted fully and immediately honors its obligations.”
Murphy said that despite the setback, he believes the future of offshore wind in New Jersey remains strong, adding that in recent weeks New Jersey has seen a historically high number of bids for its ongoing third offshore wind solicitation, and that the Board of Public Utilities will shortly announce two additional solicitations related to the state’s first-in-the-nation State Agreement Approach to build an offshore wind transmission infrastructure.
“I remain committed to ensuring that New Jersey becomes a global leader in offshore wind – which is critical to our economic, environmental, and clean energy future,” Murphy said.
According to David Hardy, group executive vice president and CEO Americas at Ørsted, the company had “no choice but to cease development of Ocean Wind 1 and Ocean Wind 2.”
“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” said Hardy. “We are extremely disappointed to have to make this decision, particularly because New Jersey is poised to be a US and global hub for offshore wind energy.”
After Ørsted’s decision, one offshore wind project remains approved by the state: the Atlantic Shores 1,510-megawatt project 10 to 20 miles off the coast between Atlantic City and Barnegat Light.
“The job impacts of Ørsted’s cancellation of New Jersey offshore wind projects remain to be seen,” said NJBIA President and CEO Michele Sikerka. “It’s obviously a disappointment when any large economic development project in our state does not bear fruit. But there are still offshore wind projects in the state queue and the solicitation of future wind projects by the state Board of Public Utilities. How the greater offshore investment community reacts to this cancellation also looms large in the future of these jobs.
“We very much support the creation of lasting and good-paying clean energy jobs,” Siekerka added. “But with that support, we also must be vigilant in ensuring that offshore wind projects are part of a comprehensive energy plan that encompasses a mixed portfolio of energy sources relative to reliability and affordability. It is also paramount that protection of the ratepayer and taxpayer are accounted for in any clean energy efforts.”
The decision to cease development of Ocean Wind 1 and Ocean Wind 2 is part of an ongoing review of Ørsted’s US offshore wind portfolio with an update planned for its Q4 2023 results announcement. The company said it remains committed to the US renewable energy industry, including offshore wind and land-based technologies.
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