In a recent development announced on Tuesday by the state’s Board of Public Utilities, New Jersey and Orsted have reached a settlement over claims relating to the cancellation of two wind farms off the state’s southern coast. They had originally been planned by Orsted.
A significant sum of $125 million that the state will receive as part of the settlement is earmarked to support investments in wind energy facilities, manufacturing facilities for components and other clean energy programs.
Orsted’s Financial Obligations
Prior to the abandonment of the projects, Orsted had provided a $100 million guarantee for the completion of one of them, Ocean Wind I, by the end of 2025. The Danish company had also taken the responsibility to contribute an additional $200 million towards the development of the offshore wind industry in New Jersey.
However, a week after the cancellation of the projects last fall, Orsted expressed its intention to withdraw from the $300 million worth of guarantees citing non-pursuit of the projects.
In a statement to The Associated Press, Orsted expressed satisfaction over the settlement. The company stated this represented their total financial obligation towards the state.
New Jersey’s Commitment to Offshore Wind
The agreement along with other announcements made on Tuesday by New Jersey, according to Orsted, “underscore New Jersey’s commitment to offshore wind and the industry’s bright future in the Garden State.” While the company refrained from commenting on future projects in New Jersey, it expressed eagerness to continue valuable partnerships with New Jersey stakeholders.
However, Jeff Tittel, a veteran environmentalist and retired president of the New Jersey Sierra Club, criticized the settlement with Orsted as “a sellout.” He expressed disappointment over the company being absolved from the entire $300 million they owed to the state for the failed project. He believes that this is a bad deal for New Jersey.
Future of Offshore Wind in New Jersey
- The state announced a move to advance the next solicitation for additional offshore wind projects from the third quarter of 2026 to the second quarter of 2025. New Jersey’s current round of solicitations closes on July 10.
- It was also announced that the state is putting on hold plans to coordinate power transmission planning for offshore wind projects with the regional grid operator, PJM Interconnection due to a new rule by federal energy regulators that could affect planning and costs.
- The state is home to vociferous opposition to offshore wind by numerous groups who argue that the projects are too costly and potentially detrimental to the marine environment.
- Despite the opposition, supporters argue that offshore wind projects are an important step towards reducing dependency on fossil fuels and combating climate change.
Democratic Gov. Phil Murphy has expressed his commitment to offshore wind development, calling it a “once-in-a-generation opportunity” that will result in significant economic and environmental benefits throughout the Garden State.
Orsted had to write off $4 billion last fall, a majority of which was associated with the cancellation of the two New Jersey projects. The company cited reasons including supply chain issues, inflation, and a failure to secure sufficient government tax credits.
As of now, there are three preliminarily approved offshore wind projects in New Jersey.
