(The Center Square) — New Jersey’s leaders are blasting a decision by a Danish energy company to back away from two major offshore wind projects off the state’s coastline.
In a statement issued Tuesday, Ørsted announced that it is scrapping two large offshore wind power projects off the coast of New Jersey, 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.
Murphy ripped the company’s decision to walk away from the projects, calling it “outrageous” and saying it “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,” he said.
Murphy said a provision of the company’s development agreement requires it to pay New Jersey $300 million to support the offshore wind sector if the projects don’t 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,” he said.
Mads Nipper, group president and CEO of Ørsted, said the company is “extremely disappointed” to stop the projects but said “significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates” were behind the decision.
“We firmly believe the U.S. needs offshore wind to achieve its carbon emissions reduction ambition, and we remain committed to the U.S. renewables market and truly value the efforts by the U.S. government to support the build-up of the US offshore wind industry,” he said in a statement.
He said the company will be assessing “the best way to preserve value” of the offshore wind projects as it winds down the development.
Ocean Wind I, which received approval from the U.S. Bureau of Ocean Energy Management in July, called for developing 1,100 megawatts of offshore wind in waters located 15 miles off New Jersey’s coast. The project would be capable of churning out enough electricity to power more than 500,000 homes, the company said.
Ocean Wind 2, a similarly situated 1,148-megawatt offshore wind project, called for generating enough electricity to power an additional half-million homes.
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.
The tax breaks, estimated by some at $1 billion, drew a lawsuit by two citizens groups who’ve asked a state Superior Court judge to declare the move unconstitutional.
The offshore wind projects were also facing a lawsuit filed by a coalition of environmental, seafood and tourism groups who argued that towering turbines off the coastline would hurt marine life, the state’s fishing and tourism industries and the local economy.
New Jersey Republicans and other critics of offshore wind power welcomed the company’s decision to pull the plug, calling it a win for the state’s taxpayers.
Senate Minority Leader Anthony M. Bucco said the announcement confirms Republican arguments that the wind projects were “too much, too fast, and too costly.”
“Republicans stated for months that Orsted’s offshore wind project was unsustainable and would inevitably fail,” he said. “Their financial challenges were glaringly obvious, yet Democrats ignored the warning signs to rush through Gov. Murphy’s extreme energy master plan without any due diligence.”
Murphy said despite the setback he plans to continue to push for other projects, saying “the future of offshore wind in New Jersey remains strong.”
“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,” he said.