Ørsted, in an announcement that seemingly caught the state off guard, announced Tuesday that it was pulling out of New Jersey — canceling the Ocean Wind 1 offshore wind project (scheduled to begin construction in 2024) as well as Ocean Wind 2.
David Hardy, CEO, Americas, at Ørsted, said the changing global economy left the company with no choice.
“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,” he said. “As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2. We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy.”
Gov. Phil Murphy, who has made clean energy a cornerstone of his administration, was angered by the decision — releasing a harsh statement against the company, which had affirmed its support for New Jersey in September.
“Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” he said. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.”
Murphy said the state had been working with Ørsted on the economic issues.
“In recognition of the challenges inherent in large and complex projects, my administration in partnership with legislative leadership insisted upon important protections that ensure New Jersey will receive $300 million to support the offshore wind sector should Ørsted’s New Jersey projects fail to proceed,” he said. “I have directed my administration to review all legal rights and remedies and to take all necessary steps to ensure that Ørsted full and immediately honors its obligations.”
State Senate President Nick Scutari (D-Clark) also took a shot at Ørsted, saying the company has “repeatedly” failed to live up to its end of any deal.
“Protecting ratepayers while ensuring a safe environment for future generations has always been our top priority,” he said. “Unfortunately, Ørsted has repeatedly failed to live up to their commitments to meet those goals, and their failure has now impeded our clean energy efforts.”
Senate Minority Leader Anthony Bucco (R-Denville) said Ørsted’s decision to pull out showed Republicans — who had repeatedly challenged the cost of the projects — were right all along.
“Republicans stated for months that Ørsted’s offshore wind project was unsustainable and would inevitably fail,” he said. “Ørsted’s decision today confirms that Republicans were right when we said this was too much, too fast and too costly.
“Their financial challenges were glaringly obvious, yet Democrats ignored the warning signs to rush through Gov. Murphy’s extreme Energy Master Plan without any due diligence. This is just another example of how Gov. Murphy’s outrageous Energy Master Plan is coming back to hurt New Jersey taxpayers.”
There were warning signs.
In September, Ørsted CEO Mads Nipper had suggested the project would be delayed until 2026 due to supply chain issues — a statement that was later walked back by company officials. However, Nipper was blunt in a prepared statement Tuesday night.
“We are extremely disappointed to announce that we are ceasing the development of Ocean Wind 1 and 2,” he said as part of the announcement.
“We firmly believe the U.S. needs offshore wind to achieve its carbon emissions reduction ambition, and we remain committed to the U.S. renewables market and truly value the efforts by the U.S. government to support the build-up of the U.S. offshore wind industry. However, the significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision, and we will now assess the best way to preserve value while we cease development of the projects.”
Where does the industry go from here?
Murphy said he’s still all in on wind.
“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,” he said.
Scutari agreed — as long as it comes with added protections.
“We will continue to move forward and create a strong green energy economy that is both manufactured and constructed with union labor,” he said “However, these projects cannot be realized without absolute ratepayer protection.
“We will utilize every taxpayer safeguard included in the prior law and make all necessary legislative changes to protect New Jersey residents moving forward. We will continue to stand up for ratepayers, the Shore tourism industry, our economy and a clean environment.”
Read more from ROI-NJ:
- Murphy: Ørsted’s decision to pull out of N.J. calls into question its ‘credibility and competence’
- O’Scanlon, District 13 leaders: Ørsted pullout is ‘I-told-you-so’ moment
“Every new industry has its setbacks,” Potosnak said. “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.”
“Responsibly developed offshore wind can be developed; our neighbors have done it with Vineyard Wind and South Fork,” she said. “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.”
State Sen. Declan O’Scanlon (R-Holmdel) and the Assembly members from District 13 said the announcement did not come as a surprise to anyone who has been looking at the ledger.
“Tonight’s announcement by Ørsted is not a surprise to those who have been relentless in questioning the governor’s overzealous ‘green’ energy mandates,” they said in a late-night release. “For those of us who simply asked reasonable questions about the long-term, practicable and financial viability of the proposed offshore projects, this is an ‘I-told-you-so’ moment.”