(The Center Square) — A Danish company will pay New Jersey $125 million to settle the state’s claims over its decision to scrap two offshore wind power projects as the state forges ahead with new plans to erect turbines off the coast.
On Tuesday, the state’s Board of Public Utilities announced that the state has settled with Ørsted after the company pulled the plug on the pair of offshore wind farms amid supply chain and cost-related issues.
The panel said the settlement funds—less than half of the $300 million the company was obligated to pay for ditching the projects—will be used to support investments in new wind energy facilities, offshore wind component manufacturing facilities and other clean energy programs to help meet the state’s climate change goals.
Ocean Wind I called for the development of 1,100 megawatts of offshore wind in waters located 15 miles off New Jersey’s coast to generate enough electricity to power more than 500,000 homes. Ocean Wind 2, a similarly situated 1,148-megawatt offshore wind project, called for powering an additional half-million homes.
But in November, Ørsted announced that it was walking away from both projects, delivering a major blow to the state’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.
The company attributed the move to “significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates,” among other factors.
Republican lawmakers, who opposed the offshore wind projects, had criticized a provision of the deal allowing the company to keep $1 billion in federal tax credits that were supposed to be passed to New Jersey utility ratepayers to offset the potential for higher electricity rates.
Two citizen groups sued over the tax breaks, asking a state Superior Court judge to declare the move unconstitutional. The suit was dropped after the projects were abandoned.
Despite the demise of the Ørsted projects, the Murphy administration said it is “accelerating” offshore wind development along the New Jersey coastline. On Tuesday, the public utilities board announced that it is putting out bids for a fifth round of offshore wind projects.
There are three other approved offshore wind projects in New Jersey that have received preliminary approval, according to the Murphy administration. The state’s fourth solicitation calls for 1.2 to 4 gigawatts of offshore wind generation capacity.
“At this pivotal inflection point for the industry both in New Jersey and across the nation, it’s critical that we remain committed to delivering on the promise of thousands of family-sustaining, union jobs and cleaner air for generations to come,” Murphy said in a statement.
