The companies feel the alliance, which combines Ørsted’s global expertise in offshore wind with PSEG’s state and regional experience executing complex energy infrastructure projects and power market knowledge, will benefit New Jersey’s development of an offshore wind supply chain, job creation efforts and environmental stewardship.
The announcement was cheered by Gov. Phil Murphy, who has made clean energy projects a staple of his New Jersey’s Energy Master Plan and central to his goal of achieving 100% clean energy for the state by 2050.
“We are thrilled that PSEG, one of New Jersey’s iconic brands and one of the nation’s largest utilities, has entered into this partnership with Ørsted,” Murphy said. “The combined expertise of these two companies will help ensure the success of this bold project, which in turn will pave the way for New Jersey to be a worldwide leader in offshore wind and clean energy. This deal will help ensure more New Jerseyans, from project engineers, to professional service providers, to construction workers, will build the expertise needed to take advantage of the growing offshore wind industry.”
The Ocean Wind project is projected to generate clean, zero-carbon electricity and power half a million New Jersey homes from its location off the coast of southern New Jersey. Ocean Wind was selected by the state to be the first offshore wind farm as part of its intention to add 7,500 megawatts of offshore wind generating capacity by 2035.
The project could provide its first power in late 2024, subject to federal permitting timelines, other development and construction activities, and final investment decisions by Ørsted and PSEG. Completion of the acquisition is anticipated to occur in the first half of 2021, subject to approval by the state Board of Public Utilities and other customary closing conditions.
PSEG Chairman and CEO Ralph Izzo said the Ocean Wind project is great for the state.
“As New Jersey’s first offshore wind project, Ocean Wind will lead the way for a productive first step into this forward-leaning industry, bringing with it new skills, jobs and carbon-free energy,” he said in a statement. “Further, this investment in offshore wind energy is well-aligned with our company’s long-term clean energy strategy.
“We’re excited to continue our close relationship with Ørsted, combining each organization’s expertise to achieve powerful benefits for energy consumers and the state.”
Henrik Poulsen, CEO and president of Ørsted, said the project will help the state in many ways.
“In addition to clean energy, Ocean Wind will bring jobs and industrial development to the Garden State during development and construction and throughout its operational lifetime,” he said. “I look forward to delivering this flagship renewable energy project to New Jersey in close cooperation with PSEG.”
On July 31, PSEG announced it would explore strategic alternatives related to PSEG Power’s non-nuclear generation fleet, accelerating its transition to a primarily regulated and contracted business with a zero-carbon generation platform. In line with this strategy, PSEG continues to evaluate participation in additional offshore wind opportunities in New Jersey and other mid-Atlantic states.
Ørsted is the global leader in offshore wind development and operates 26 wind farms globally, including the U.S.’s first offshore wind farm, the Block Island Wind Farm. In January, Ørsted was named the most sustainable company in the world by Corporate Knights.
David Hardy, CEO for Ørsted Offshore North America, said the companies complement each other well.
“Our two organizations have unmatched expertise and experience constructing complex energy projects,” he said. “We’re excited to partner with PSEG due to their extensive knowledge of the market and previous track record, and we’re looking forward to providing enough clean energy for 500,000 New Jersey homes.”
Lathrop Craig, PSEG vice president of offshore wind development, said he hopes this is just the first of many announcements.
“PSEG and Orsted have natural synergies, and matching Ørsted’s global construction expertise with PSEG’s deep local history positions us well to deliver a successful project for New Jersey,” he said. “As more states look to decarbonize their energy supply, we look forward to this and future opportunities throughout New Jersey and the Mid-Atlantic.”
Wachtell, Lipton, Rosen & Katz is serving as transactional counsel to PSEG. Skadden, Arps, Slate, Meagher & Flom LLP is serving as transaction counsel to Ørsted.