N.J. concerned that Ørsted might withdraw from N.J. offshore wind project, sources say - New Jersey Globe | New Jersey Politics
N.J. concerned that Ørsted might withdraw from N.J. offshore wind project, sources say - New Jersey Globe
After Gov. Phil Murphy and Democratic lawmakers invested tremendous political capital in approving a controversial offshore wind farm, there is concern that the company chosen to develop the project, Ørsted, is on the verge of pulling out of the deal, several sources have told the New Jersey Globe.
The anticipated decision to drop their New Jersey project comes just one week before the state’s midterm elections.
Offshore wind – and unproven allegations that offshore wind is responsible for the deaths of whales and other mammals – has become an issue in several legislative contests.
Citing high interest rates, supply chain delays, and other financial challenges, Reuters reported today that the Danish energy company is preparing to scale back its North American offshore wind deals.
That left some Murphy administration officials concerned that Ørsted might have misrepresented their financial position.
A spokesperson for Ørsted did not immediately respond to an email seeking comment.
The legislature pushed through a $1 billion subsidy to Ørsted to build nearly 100 wind turbines off New Jersey’s south Atlantic coast if the project was completed.
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.
Ørsted will announce its third-quarter earnings tomorrow.
State Sen. Michael Testa (R-Vineland), a staunch opponent of the Ørsted project, said that if the reports are true, “9.3 million New Jerseyans deserve a complete and total audit” to determine how much the state has already invested in the deal.
“Ratepayers forced through legislation to subsidize $1 billion deserve the money back,” he said. “Ørsted is New Jersey’s Solyndra.”
This story was updated at 5:59 PM with comment from Testa.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.