Offshore wind in New Jersey is off as Ørsted drops out

Ørsted has pulled out of a controversial plan to develop offshore wind farms, leaving Gov. Phil Murphy’s Green Energy plan in jeopardy one week before Democrats defend their majorities in both houses of the legislature.

The collapse of the deal comes after Murphy and Democratic legislative leaders invested significant political capital in securing a $1 billion subsidy for the Danish energy company last June, if the project was completed.

“The significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision, and we will now assess the best way to preserve value while we cease development of the projects,” said Mads Nipper, Ørsted’s group president and CEO.

The Murphy administration had been advised last week that the deal was in jeopardy of falling through.

Tonight, Murphy slammed Ørsted for their decision.

“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” Murphy said.  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.”

Murphy said he had “insisted” that legislation that approved the subsidy included a $300 million clawback for the state.

“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.

Offshore wind has become an issue in several competitive legislative races this year after Republicans have driven unproven allegations that offshore wind is responsible for the deaths of whales and other mammals.

Reuters reported today that the Danish energy company is preparing to scale back its North American offshore wind deals.

“We firmly believe the US needs offshore wind to achieve its carbon emissions reduction ambition, and we remain committed to the US renewables market and truly value the efforts by the U.S. government to support the build-up of the US offshore wind industry,” Nipper stated.

Ørsted recently put $100 million in escrow to guarantee that the first offshore wind farm would be operational by December 2025.

The legislation, which faces a legal challenge, includes a $300 million clawback for New Jersey.

“Ultimately, as we have seen in other states recently, offshore wind projects awarded prior to 2020 have been impacted by a combination of interest rate escalation, supply chain cost increases, and inflation. And while today is a setback, the future of offshore wind in New Jersey remains strong,” Murphy said.  “In recent weeks we’ve seen a historically high number of bids into New Jersey’s ongoing third offshore wind solicitation, and the Board of Public Utilities will shortly announce two additional solicitations related to our first-in-the-nation State Agreement Approach to build an offshore wind transmission infrastructure.”

State Sen. Michael Testa, Jr. (R-Vineland) told the New Jersey Globe this afternoon that he wants a complete and total audit to determine how much New Jersey has spent on the failed deal.

The New Jersey Globe first reported that the deal was collapsing.