October 2, 2023 — Danish global offshore wind developer Orsted’s abrupt announcement this week that it is abandoning both of its massive projects planned off the New Jersey coast is a stinging blow to Gov. Phil Murphy’s ambitious goal of addressing climate change that threatens the state’s coast.
The company’s announcement Tuesday night was akin to abruptly snatching away key pieces of the state’s renewable energy puzzle. As of Wednesday, it was unclear how leaders would fill that void.
However, one key piece does remain in place: Atlantic Shores, the largest single wind farm yet approved by the New Jersey Board of Public Utilities (BPU).
Orsted in its earnings statement cited economic headwinds as the reason.
“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” said David Hardy, group executive vice president and CEO Americas at Orsted. “As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2.”
Hardy said the company was disappointed and thanked Murphy and other state leaders who tried to kick-start the industry in the state, hoping to make it a hub for offshore wind in the Northeast.
‘Outrageous’
Murphy, however, was having none of it. His administration took significant political heat in backing recent legislation allowing Orsted to take federal renewable energy credits that initially state law allowed to go only to ratepayers.
“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” the governor said in a statement. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.”
Murphy said his administration is looking “to review all legal rights and remedies and to take all necessary steps to ensure that Orsted fully and immediately honors its obligations.”
State officials who backed offshore wind are “upset, frustrated, and disappointed,” said a senior administration official, who called Orsted’s decision a “setback” in the state’s aggressive goal of obtaining 100% clean energy by 2035. The official said the administration is proceeding with offshore wind because “it’s too important to our economic future. It’s too important for our environmental and energy needs.”
It could take time for the state to find, and approve, a new developer to replace the 2.2 gigawatts of energy that would have been generated by Orsted’s Ocean Wind 1 and 2 projects — enough to have powered about 1 million homes.