Ørsted Shuts Down New Jersey Offshore Wind Projects – The SandPaper

The Newsmagazine of Long Beach Island and Southern Ocean County

Less than a month after beginning onshore construction at two Ocean County sites, the Danish-based wind energy developer of New Jersey’s first offshore wind farm pulled the plug on that project and a planned second one, too.
In an interim financial report, Mads Nipper, group president and chief executive officer of Ørsted, pointed to “the current market situation with supply chain challenges, project delays and rising interest rates” as reasons for the company’s abandonment of the Ocean Wind 1 project.
“Therefore, as part of our ongoing review of our U.S. offshore wind portfolio, we’ve decided to cease the development of Ocean Wind 1 and Ocean Wind 2,” he said in a statement released by the company Oct. 31. “At the same time, we’ve taken final investment on the 704 MW Revolution Wind project (Rhode Island), progressing it to the construction phase with an attractive forward-looking value creation.”
Nipper said the company has initiated a variety of actions to bolster its capital structure and rating as well as “to improve our competitiveness and value creation” despite the challenges to its U.S. portfolio and the current market conditions.
Late Tuesday evening, Gov. Phil Murphy released a statement, via social media, condemning Ørsted’s decision “to abandon its commitments to New Jersey. He called the company’s action “outrageous,” saying it “calls into question the company’s credibility and competence.”
“I have directed my Administration to take all necessary steps to ensure that Ørsted fully honors its obligations,” he said. “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.”
Just last month, onshore construction related to Ocean Wind 1 began at Island Beach State Park with laying the the foundation for bringing electrical connection back to the decommissioning Oyster Creek Generating Station. Work at the former nuclear power plant also began last month. Oyster Creek was one of two points of connection for Ørsted’s Ocean Wind 1 project. The second point of connection is at the former site of BL England Generating Station in Upper Township, Cape May County.
Ocean Wind 1 was expected to produce enough electricity to power 500,000 homes. The project included up to 98 wind turbine generators, up to three offshore high-voltage alternating current substations, inter-array cables linking the individual turbines to the offshore substations, substation interconnector cables linking the substations to each other, offshore export cables, an onshore export cable system, two onshore substations, and connections to the existing electrical grid in New Jersey.
The wind turbine generators, offshore substation and substation interconnector cables were to be located in New Jersey’s Outer Continental Shelf, roughly 13 nautical miles (15 statute miles) southeast of Atlantic City. The offshore export cables would be buried below the seabed in the Outer Continental Shelf and state of New Jersey-owned submerged lands.
Earlier this year, Newark-based PSEG announced it had completed the sale of its 25% stake in Ocean Wind 1 to Ørsted, making the Danish-based wind energy developer the sole owner of the project.
Bob Stern, president of Save LBI, said Wednesday morning he hopes Ørsted’s announcement gives offshore wind proponents, including the Biden and Murphy administrations, “pause for reflection and they consider alternative ways to achieve greenhouse goals that are far less expensive” with far less impact to the environment and marine life, and “not just double down” on the remaining projects.
The first rumblings of Ørsted’s supply chain issues, the current market and other items that “led to significant impairments” in the third quarter, according to Nipper, surfaced in August when the company announced its intention to put the brakes on the start of Ocean Wind 1 operations until 2026.
“While it’s disappointing to hear Ørsted is not moving forward, they did pony up $300 million in performance bonds to ensure the projects were built. I expect Ørsted to make good on their payment obligation due to their failure to complete the much needed clean and reliable offshore wind projects,” said Ed Potosnak, executive director of New Jersey LCV. “Every new industry has its setbacks. However, this decision should not distract from our efforts to move toward a clean energy future in New Jersey using offshore wind as a tool to protect our oceans and mitigate climate change.”
It’s unclear how, if at all, Ørsted’s decision will impact the Atlantic Shores wind farm planned off the coast of Long Beach Island.
As proposed, the Atlantic Shores Offshore Wind farm would site 1,000-foot-high turbines between 9.5 and 13.5 miles off the entire length of the LBI coast, extending farther eastward into the Atlantic Ocean. While offshore construction is expected to begin later in the decade, an exact date has not yet been set. The project is a 50-50 partnership between Shell New Energies US LLC and EDF Renewables North America. It was formed in December 2018 to co-develop nearly 183,353 acres of leased sea area on the Outer Continental Shelf, located within the New Jersey Wind Energy Area.
“Despite the disappointing news that Ørsted is no longer moving forward with Ocean Wind I and II, New Jersey’s opportunity to take advantage of this powerful renewable energy source does not stop here. The beginning of an industry will inevitably face hurdles especially in an environment of inflation and supply chain bottlenecks, but New Jersey will move forward,” said Anjuli Ramos-Busot, director of the the New Jersey chapter of the Sierra Club. “Responsibly developed offshore wind can be developed, our neighbors have done it with Vineyard Wind and South Fork. We are eager for the third round of solicitations and see this just as a setback in our timeline, not our goals of cleaner air, jobs and transitioning away from fossil fuels.”
— Gina G. Scala
ggscala@thesandpaper.net
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