Gov. Murphy, Democrats stick with offshore wind despite end of major windfarm projects

Ørsted’s withdrawal from two New Jersey offshore wind projects has upended New Jersey’s clean energy goals, though Gov. Phil Murphy signaled the state would continue on its path toward more renewables.

The Danish wind giant on Tuesday announced it would cease development on two 1,100-megawatt wind projects off New Jersey’s coast, saying inflation, interest rate hikes, and persistent supply chain issues cut $2.8 billion from the first project’s worth in the first three quarters of 2023.

“I want to be absolutely clear that we are implementing all the learning from this in terms of future project development and timing of capital commitments,” Ørsted CEO Mads Nipper said during an investor call Wednesday.

During the call, Nipper said he expects the firm would pay between $1.1 billion and $1.5 billion in cancellation fees and penalties, though much of those funds would go toward vendors along its supply chain.

It’s unclear whether Atlantic Shores, another New Jersey offshore wind developer, will continue building a 1,510-megawatt windfarm it won a contract for in June 2021. Atlantic Shores in July warned it would need public dollars for its project to remain viable, just as Ørsted had recently.

A spokesperson for the Atlantic Shores project did not immediately return a request for comment.

Murphy showed little indication he would walk away from his ambitious renewable energy goals — he wants the state to draw 100% of its power from renewable sources by 2035 — following Ørsted’s withdrawal.

“While today is a setback, the future of offshore wind in New Jersey remains strong. In recent weeks we’ve seen a historically high number of bids into New Jersey’s ongoing third offshore wind solicitation,” the governor said in a statement.

Democratic legislative leaders, who have at times criticized the state Board of Public Utilities’ approach to offshore wind development, criticized the Danish firm’s withdrawal but also showed little signs of backing down from wind energy.

“We will continue to move forward and create a strong green energy economy that is both manufactured and constructed with union labor. However, these projects cannot be realized without absolute ratepayer protection,” Senate President Nicholas Scutari and Assembly Speaker Craig Coughlin said in a joint statement.

Ørsted’s cancellations are expected to bring $300 million to New Jersey’s coffers.

As part of a lucrative incentive package approved in July that would have sent federal tax credits bound for ratepayers to the developer instead, Ørsted agreed to place $200 million in escrow with the state and $100 million in securities that would go to the state if the developer failed to complete the project on time.

The bill required the Danish firm to enter a legally binding agreement to complete the project if it chose to retain the tax credits.

Some lawmakers have called on the state to take Ørsted to court on other grounds. Sen. Vin Gopal (D-Monmouth), one of the few Democratic lawmakers who voted against the Ørsted bill, urged Attorney General Matt Platkin to sue the firm for fraud and negligence.

“This was a bad deal for ratepayers and it is up to the Attorney General to recover every single tax dollar wasted,” Gopal said in a statement. “Whenever a corporation proves to be dishonest and misleading about their commitment to New Jersey, it should be immediately met with the legal remedies necessary to protect our residents and taxpayers.”

Murphy on Tuesday said he ordered his administration to look to all “legal rights and remedies” to ensure the state receives the $300 million from Ørsted.

Some offshore wind supporters worry the cancellation of Ørsted’s windfarms could imperil future renewable projects.

“This a devastating setback for offshore wind in New Jersey and Gov. Murphy’s clean energy agenda. These projects have been mishandled from the beginning by Ørsted. They didn’t listen to the public and did not understand our needs or politics. They thought that they would get a blank check. Their arrogance is why these projects failed,” said environmental activist Jeff Tittel. “After this environmental and political disaster, how will New Jersey meet its climate goals?”

New Jersey GOP hits Democrats on wind and whales in advance of legislative races

Republicans, who have railed against wind energy for months, met Ørsted’s announcement with celebration. GOP candidates have hammered Democrats over their support of offshore wind in the runup to Election Day next week, when all 120 seats in the Legislature are on the ballot and the GOP is hoping to win back control of the body.

“It’s time to put ratepayers and taxpayers first in considering the necessary energy transitions we face as a society. Since Democrats in this one-party rule state have proven to be useless lapdogs in enabling this egregious abuse of taxpayer dollars, only common sense Republican leadership in the Legislature can produce solutions that will put New Jersey families first,” said Bob Hugin, the state Republican chairman.

For months, Republicans have sought to link whale deaths and strandings that began to occur at elevated levels in 2016 to offshore wind surveying work that began years later. The National Oceanic and Atmospheric Administration has said there is no established link between wind surveying and whale deaths.

But the party’s efforts have been successful in reversing what had been longstanding, bipartisan support for offshore wind. A Stockton Poll released in September found just 50% of New Jersey adults supported wind farms off the state’s coast, down from 80% three years ago.

Michael Makarski, a spokesperson for Affordable Energy New Jersey, which has opposed the governor’s energy master plan, called the administration’s approach “fatally flawed.”

“This is the sad but always inevitable conclusion to the story — the underlying math never added up and no amount of state or federal bailout money could change that fact,” Makarski said.