Ørsted just axed plans for two New Jersey offshore wind farms – here’s why

New Jersey’s governor is furious because Ørsted canceled two huge offshore wind farms off the New Jersey coast – this is what happened.

Ocean Wind 1 won’t be New Jersey’s first offshore wind farm after all.

In a major reversal, Ørsted says it’s killing the 1,100-megawatt (MW) Ocean Wind 1 and 1,148-MW Ocean Wind 2 projects, just as construction was about to start on Ocean Wind 1. Electrek only just reported on October 12 that Ørsted had put up a $100 million guarantee that it would have Ocean Wind 1 online by December 2025.

In a statement today, David Hardy, group EVP and CEO Americas at Ørsted cited “high inflation, rising interest rates, and supply chain bottlenecks” for the cancellation.

Ørsted says it intends to retain the seabed lease area and consider its best options as part of a US offshore wind portfolio review it’s conducting. It has an update planned for its Q4 2023 results announcement.

And on Ørsted’s earnings call this morning, Ørsted CEO Mads Nipper went into more detail about what defeated the two projects. He told reporters that the biggest reason is “further significant delays on [installation] vessel availability.” He didn’t name the installation vessel company, but the Ocean Wind 1 project has so far been working with vessels belonging to Belgium-based wind farm installer DEME Group.

He went on to explain that a lack of installation vessels would mean a multi-year delay for Ocean Wind 1. That would mean the company would have to re-contract all its project scopes at “expectedly higher prices – that was the reason for the swing.”

In July, to help keep the financially struggling projects afloat, Governor Phil Murphy (D-NJ) signed a law that allowed Ørsted to keep federal tax credits that it otherwise would have had to return to ratepayers.

So, unsurprisingly, Murphy’s pretty angry. New Jersey taxpayers won’t lose funds from the pullout, but the state and its residents are losing a critical source of clean energy, billions of dollars in investments, and thousands of local jobs the two projects were slated to provide.

In a statement, Murphy said:

Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence.

As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project. 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 Orsted’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 Orsted fully and immediately honors its obligations.

Electrek’s Take

It’s a major setback, for sure, seeing how New Jersey has a 7.5 gigawatt (GW) of offshore wind by 2035 target – and there’s also that pesky thing called climate change – but all is not lost. The 1.5 GW Atlantic Shores Offshore Wind project is still moving forward off the coast of Atlantic City, and the state is expected to announce another offshore wind solicitation at the beginning of 2024. Nearly 40 New Jersey advocates released a statement today that reaffirms their support for offshore wind.

And in another bit of news that slightly takes the sting off, Nipper said that Ørsted will move forward on Revolution Wind, Connecticut and Rhode Island’s 704 MW offshore wind farm, as it’s secured an installation vessel – the Scylla – so the company feels “comfortable moving [the project] forward.” The South Fork project in New York State is also quickly progressing.

And one final point: The “grassroots” group in Cape May County that’s been fighting the Ocean Wind projects wants to take credit for their demise. They claim that Ørsted is running scared in “the face of unrelenting opposition” from Cape May County after they recently filed a federal lawsuit.

As I’ve said, I don’t take the Cape May County government’s objections seriously. It’s led by Michael J. Donohue, Republican county chairman, who is “special counsel on offshore wind” to the group. And its counsel has extensive ties to a big-oil-funded legal movement that generally works to stop climate policy.

Further, the group’s “studies” that it cites to back its lies about wind farms killing whales and birds sources aren’t relevant or credible – for example, the noise from one oil tanker is 20,000x more disruptive to ocean life than one stationary wind turbine. There’s more than a whiff of politics, not science, around their objections. They ultimately got what they wanted for now but didn’t cause it.

Read more: The US’s largest offshore wind farm just got the green light

Photo: Ørsted

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