Another developer building a N.J. windfarm has warned its faces dire financial straits
By Nikita Biryukov
New Jersey Monitor
Gov. Phil Murphy showed little indication he would walk away from his ambitious renewable energy goals following Orsted’s withdrawal from two windfarm projects. Their withdrawal from two New Jersey offshore wind projects has upended New Jersey’s clean energy goals, though Gov. Phil Murphy signaled the state would continue its path toward more renewables.
The Danish wind giant on Tuesday announced it would cease development on two 1,100-megawatt wind projects off New Jersey’s coast, saying inflation, interest rate hikes, and persistent supply chain issues cut $2.8 billion from the first project’s worth in the first three quarters of 2023.
It’s unclear whether Atlantic Shores, another New Jersey offshore wind developer, will continue building a 1,510-megawatt windfarm it won a contract for in June 2021. Atlantic Shores in July warned it would need public dollars for its project to remain viable, just as Orsted had recently.
A spokesperson for the Atlantic Shores project did not immediately return a request for comment.
Murphy showed little indication he would walk away from his ambitious renewable energy goals — he wants the state to draw 100% of its power from renewable sources by 2035 — following Orsted’s withdrawal.
“While today is a setback, the future of offshore wind in New Jersey remains strong. In recent weeks we’ve seen a historically high number of bids into New Jersey’s ongoing third offshore wind solicitation,” the governor said in a statement.
Democratic legislative leaders, who have at times criticized the state Board of Public Utilities’ approach to offshore wind development, criticized the Danish firm’s withdrawal but also showed little signs of backing down from wind energy. “We will continue to move forward and create a strong green energy economy that is both manufactured and constructed with union labor. However, these projects cannot be realized without absolute ratepayer protection,” Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin said in a joint statement.
Orsted’s cancellations are expected to bring $300 million to New Jersey’s coffers.
As part of a lucrative incentive package approved in July that would have sent federal tax credits bound for ratepayers to the developer instead, Orsted agreed to place $200 million in escrow with the state and $100 million in securities that would go to the state if the developer failed to complete the project on time.
The bill required the Danish firm to enter a legally binding agreement to complete the project if it chose to retain the tax credits.
Republicans, who have railed against wind energy for months, met the announcement with celebration. GOP candidates have hammered Democrats over their support of offshore wind in the runup to Election Day next week, when all 120 seats in the Legislature are on the ballot and the GOP is hoping to win back control of the body. The party’s efforts have been successful in reversing what had been longstanding, bipartisan support for offshore wind. A Stockton Poll released in September found just 50% of New Jersey adults supported wind farms off the state’s coast, down from 80% three years ago.
Michael Makarski, a spokesperson for Affordable Energy New Jersey, which has opposed the governor’s energy master plan, called the administration’s approach “fatally flawed.” “This is the sad but always inevitable conclusion to the story — the underlying math never added up and no amount of state or federal bailout money could change that fact,” Makarski said.
