Ørsted pulls out of two NJ offshore wind farm projects

By Alvin Wu
Business
Ørsted pulls out of two NJ offshore wind farm projects

A view of an Ørsted wind turbine. ØRSTED/Handout

Nov. 10 (ZFJ) — Ørsted has pulled out of developing two offshore wind farms, set to have been New Jersey’s first ones, due to economic challenges, the company announced on Tuesday, Oct. 31.

“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 David Hardy, group executive vice president and CEO of Ørsted Americas.

The company said that a vessel delay for its Ocean Wind 1 project “considerably impacted project timing.”

Ocean Wind 1 and 2 were 1,100 and 1,148 megawatt projects respectively. One megawatt can power about 750 homes at once, according to California’s power grid operator.

The Danish company, the world’s largest offshore wind developer, planned to construct the wind farm 15 miles off of the southern N.J. coast. Ørsted plans to retain the seabed lease area as it reviews its U.S. offshore wind portfolio.

Government officials were dismayed to hear of Ørsted’s withdrawal.

“Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” said Governor Phil Murphy. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.”

Murphy signed a bill in early July to give Ørsted a tax break for Ocean Wind 1 valued at $1 billion after it narrowly passed the state legislature.

Ørsted is currently trying to avoid a $300 million guarantee it agreed to pay N.J. if Ocean Wind 1 was not completed. The state is working on evaluating its legal options.

The withdrawal is a setback to state and federal targets for the reduction of fossil fuel dependence to combat global warming, but officials said they were still committed to continuing their efforts.

Murphy pointed to other bids made to the state government to build offshore wind infrastructure, saying that “the future of offshore wind in New Jersey remains strong.”

Wind produced 0.4% of N.J.’s in-state renewable generation in 2021, according to the U.S. Energy Information Administration. The state aims to produce 11,000 MW of wind energy by 2040.

In response to Ørsted’s pullout, the Biden administration said that it is committed to backing the offshore wind industry.

“While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry,” said White House spokesperson Michael Kikukawa.

Ørsted’s N.J. projects have faced local opposition to the wind turbines’ visibility from the coastline. Additionally, the Cape May County Board of Commissioners pointed to studies from the U.S. Bureau of Ocean Energy Management and Harvard University have questioned the effectiveness of the projects in mitigating global warming.

Ørsted will be moving forward with its 704 MW Revolution Wind project in Connecticut and Rhode Island and 130 MW South Fork Wind project in New York.

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