Ørsted Finalizes Lease to Become New Jersey Offshore Wind Port's First Tenant - gCaptain
Ørsted Finalizes Lease to Become New Jersey Offshore Wind Port's First Tenant
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The state of New Jersey has approved agreements with Ørsted for the development and sublease of up to 34 acres at the New Jersey Wind Port (NJWP), a specialized port facility to support offshore wind farms.
With the agreement, Ørsted becomes the port’s inaugural tenant. The company, which is developing the 1.1 gigawatt (GW) Ocean Wind 1 project offshore New Jersey, expects to create up to 200 jobs over its lease term. The wind farm itself is expected to create over 15,000 jobs over its 25-year operational life.
The New Jersey Wind Port will be the first and largest facility of its kind in the U.S, providing port capacity to support offshore wind projects and serving as a regional hub for turbine component manufacturing. New Jersey broke ground on the project in 2021. The 220-acre port can accommodate multiple Tier 1 component manufacturers, such as blades, nacelles, towers, and cables.
The Biden Administration approved the construction and operation plan for the Ocean Wind 1 project earlier this month, making it the third commercial-scale offshore wind energy project to be approved in U.S. federal waters under the Biden Administration. The first two approved projects, the Vineyard Wind project off Massachusetts and the South Fork Wind project offshore Rhode Island and New York, are currently under construction.
According to the agreement approved by the New Jersey Economic Development Authority (NJEDA) Board, Ørsted has agreed to sublease up to 34 acres of property at the port for up to two years, with a total rent payment estimated at over $25 million.
“The Board’s approval serves as another major step forward in achieving Governor Murphy’s 11 GW offshore wind target, and cements New Jersey’s reputation as a national leader in offshore wind,” said NJEDA Chief Executive Officer Tim Sullivan. “Ørsted’s decision to marshal its Ocean Wind 1 project from the New Jersey Wind Port will create 200 jobs that would otherwise have gone to other states, and is the first of many projects that will use the Port in the years and decades ahead.”
The agreement with Ørsted includes a mechanism for shared berth use, which allows the port to attract manufacturing tenants who need access to purpose-built wharves to ship out completed components.
The NJEDA first issued a Notice to sublease in November 2020 and Ørsted submitted a non-binding offer the following month. The two parties executed a Letter of Intent (LOI) in April 2022 and have since been negotiating final terms of the agreement. The property being subleased to Orsted is owned by PSEG Nuclear and is being leased by NJEDA from PSEG Nuclear on a 78-year basis.
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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.