JERSEY SHORE – Orsted’s cancellation of two ocean wind projects off the coast was welcome news to environmental groups and certain public officials but Governor Phil Murphy was outraged by the announcement.
Orsted, a Danish company, explained the cancelation of their Ocean Wind 1 and 2 projects stating, “anticipated impairments on its US portfolio of up to DKK 16 billion” or approximately $2.266 billion and said that “the US offshore wind projects have experienced further negative developments from adverse impacts relating to supply chains, increased interest rates.”
The announcement was the latest in a series of setbacks for the offshore wind industry in the northeast. New York regulators rejected a request a few weeks back from companies for larger subsidies to complete large-scale wind, solar and offshore wind projects. They stated the companies were expected to abide by the terms of their deals with the state.
Orsted Chief Executive Officer Mads Nipper said the company was disappointed to be halting the projects because it believes the United States needs wind power to reduce carbon emissions.
Orsted will, however, move ahead with its Revolution Wind project in Connecticut and Rhode Island. It could lose a $100 million guarantee that the firm posted with New Jersey that it would build Ocean Wind I by the end of 2025. That money could be returned to ratepayers.
Clean Ocean Action pointed to Orsted’s announcement as “dramatic evidence that the offshore wind industry is in turmoil. This announcement by the world’s leading offshore wind developer affirms Clean Ocean Action’s concerns that ocean industrialization is moving at a reckless pace, fueled by federal and state government fast-tracking.”
The environmental group added in a release that the projects had advanced too quickly and also noted the industry’s large scale technological failures, supply chain issues, and major financial challenges, despite government bailouts.
“It is long overdue for developers and federal and state governments to take a time-out, pause the reckless exploitation and industrialization of the ocean, and implement good governance, transparency, science, due diligence, and a pilot project,” according to a statement from Clean Ocean Action.
The organization is calling for a halt to any further approvals and authorizations until after the forthcoming Government Accountability Office (GAO) study on offshore wind in the northeast, “robust and critical” baseline studies, a pilot project to determine true ecological impacts, and an investigation into the unprecedented whale deaths in the New York/New Jersey region.
Congressman Chris Smith (R-NJ) also welcomed the news that Orsted had ceased development of the two offshore wind turbine projects
“Turns out that despite huge taxpayer subsidies and credible predictions of big increases to ratepayers, Orsted has concluded that they will still lose money,” Smith said. “Orsted’s decision was a first step in exposing the economic unsustainability and environmental dangerousness of ocean wind turbines – each the size of the Chrysler Building in New York City – and Orsted’s pulling out of the deal may help slow and eventually halt similar projects off New Jersey’s coast.”
“Orsted’s withdrawal marks a victory for local residents, environmentalists, and NJ commercial and recreational fishermen who have worked alongside me and Congressman Jeff Van Drew to expose the dangers inherent in the massive ocean industrialization plans slated for the Jersey Shore,” Smith said.
“It also marks a major failure for the Biden and Murphy Administrations who tried to push it through and throw billions of taxpayer dollars at the unsound, improperly vetted projects,” Smith added.
Smith and other local public officials had called for a pause on offshore wind development stating that it would lead to a catastrophic impact on sea mammals including whales and dolphins, and that it would destroy commercial and recreational fishing.
Other concerns involved potential harm to tourism, and that such projects could significantly weaken radar which would make it dangerous for ships and aircraft.
Smith said, “offshore wind turbines are a serious threat to national security.” He authored an amendment that was passed in the House of Representatives on July 20 that requires President Biden or his designee to certify that offshore wind projects “will not weaken, degrade, interfere with, or nullify the capability of radar relied upon the Federal Aviation Administration or the Armed Forces.”
That legislation is pending in the US Senate.
Governor Phil Murphy said the decision by Orsted “to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence.”
“As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind I project,” the governor added. He noted that Orsted was required to put up an additional $200 million to benefit the state’s offshore wind industry, and said he would make sure the company abides by that obligation.
Murphy added that while Orsted was facing the same supply chain, inflation and other challenges that their competitors in the offshore wind industry were facing, the industry would succeed in New Jersey. He noted that the state would be soliciting new project proposals.
