Next up for N.J.: Finding way to make Atlantic Shores Project 1 work

Joris Veldhoven. (File photo)

Lost in the sudden news Tuesday night that Ørsted was pulling the plug on its Ocean Wind 1 and Ocean Wind 2 offshore wind projects was this: The Atlantic Shores Project 1 also is facing severe financial challenges.

The project, one of three potential efforts by Atlantic Shores Offshore Wind (which is a 50-50 joint venture between Shell New Energies US LLC and EDF Renewables) has a financial investment decision in 2024 — and could be delivering power as soon as 2028.

If it can make the finances work.

Atlantic Shores CEO Joris Veldhoven told ROI-NJ in a wide-ranging interview in September that structural changes to the company’s agreement are needed by the end of the year, unknowingly foreshadowing Ørsted’s decision.

“As it stands, we cannot compete for financing and provide continued shareholder investment if we don’t adjust our deal to a changed world,” he said then. “That’s just the reality. And that’s not a New Jersey issue. That’s not a U.S. issue. That’s a global issue that is plaguing offshore wind and many other industries at the moment.”

Atlantic Shores is in a quiet period, but, on Wednesday, Veldhoven did release a statement on the project to ROI-NJ.

“Atlantic Shores remains committed to delivering safe, reliable, renewable power and establishing a thriving domestic offshore wind industry anchored in New Jersey,” it read. “This means supporting New Jersey in meeting its clean energy goals and driving economic growth. Our first project alone will power more than 700,000 New Jersey homes, generate nearly $2 billion of in-state economic activity and create thousands of good-paying jobs in New Jersey’s thriving clean energy economy.”

Veldhoven again acknowledged the difficult financial times — and efforts to find a solution.

“Despite the extraordinary challenges driven by supply chain constraints, the cumulative impacts of inflation and higher financing charges associated with building critical infrastructure projects, we are actively engaging in conversations with the administration, regulators and elected leaders across New Jersey to identify viable solutions that will not only preserve the progress made thus far, but also facilitate the successful execution of Atlantic Shores Project 1,” he said.

A state official familiar with discussions with Atlantic Shores but not authorized to speak on them publicly said the state and Atlantic Shores are actively working toward a solution.

“We’re in really close conversation with Atlantic Shores,” the person said. “We’re completely aware of the challenges and we are closely working with them to figure out a path forward.”

It is a challenge any governing body has with any offshore wind agreement that was signed prior to the pandemic, a second state official said.

“There are two types of projects: Those born before the pandemic and those born after,” the person said. “Ocean Wind had compounding problems of the war in Ukraine, supply chain challenges, inflation and interest rates going up 3x. Ultimately, it was just too much for the project and it tipped over. The new crop of projects that are being conceived and developed in the wake of all are more resilient.”