(The Center Square) — In a blow to New Jersey’s clean energy plans, a Danish company behind the state’s first offshore wind project is delaying it until 2026, citing supply chain issues and a lack of financial support from the federal government.
Ørsted announced on Wednesday, that it is delaying construction on Ocean Wind I off the southern New Jersey coast as it moves to write off about $2.3 billion in costs for several offshore wind projects that have depreciated since they were first proposed.
The company said it had considered scrapping the New Jersey project altogether but still believes it will be economically viable in the long run.
“As it stands today, we believe the best direction is to continue to invest in these projects, David Hardy, an executive vice president and CEO of the company’s North American operations, said during an earnings call. “If the walk-away scenario is the economical, rational decision for us, then this remains a real scenario for us.”
Hardy said the company will also be “reconfiguring” Ocean Wind 2, a similarly situated 1,148-megawatt offshore wind project that will add enough electricity to power an additional half-million homes.
The news came as a blow to New Jersey’s clean energy plans and Gov. Phil Murphy’s push to put the coastal state at the forefront of the nation’s nascent offshore wind industry.
But New Jersey Republicans and other critics of offshore wind power welcomed the news, calling it a win for the state’s taxpayers.
“Supply chain issues and rising inflation prove that these projects are unsustainable and the cost of continuing these projects will be too much of a burden for our state to bear,” state Sen. Michael Testa, R-Cape May, said in a statement. “Not to mention the environmental damage that has ensued since survey work on these projects began.”
Ocean Wind I, originally expected to be completed by the end of 2024, calls for the development of 1,100 megawatts of offshore wind in waters located 15 miles off New Jersey’s coast. The towering wind turbines will be capable of churning out enough electricity to power more than 500,000 homes, the company says.
In July, Murphy signed an agreement with Ørsted, allowing the company to keep federal tax credits that were supposed to be passed to New Jersey utility ratepayers to offset the potential for higher electricity rates.
Murphy and Democrats who pushed the plan through the state Legislature argued the tax relief was needed to help the company deal with inflation and the lingering impact of the COVID-19 pandemic.
New Jersey Republicans have strongly criticized the plan, which they said would cost the state an estimated $1 billion and shift the cost of developing offshore wind to taxpayers.
The move has drawn a lawsuit from citizen groups who argue that the tax breaks are unconstitutional.
