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A Boardwalk Beef

Orsted cancels major offshore wind project off Jersey Shore

There's a fight at the Jersey Shore—but this time, the ridiculous reality TV show isn't to blame.

Danish energy company Orsted announced October 31 it is backing out of its Ocean Wind 1 and 2 projects, drawing rancor from the New Jersey governor, raised eyebrows from skeptics of renewable energy, and praise from certain local officials of Cape May County.

N.J. governor Phil Murphy called the Ørsted decision "outrageous" and questioned the company's "credibility and competence," in a statement released by the governor's office Tuesday night. Conversely, Cape May County representatives celebrated the move.

"This is a great day for the people and businesses of Cape May County,” said County Commission Director Len Desiderio. “This is a great day for the Atlantic Ocean. This is a great day for the whales and dolphins. The massive, reckless experiment known as Ocean Wind One has been stopped and Ocean Wind Two abandoned. There were many who consistently told us that we were wasting our time, and that there was nothing we could do about the project being built. Well, I am happy that the County Board of Commissioners and so many in our business community and the grassroots groups that have been protesting did not listen to the naysayers. We are a small county down here at the southernmost point of New Jersey, but we knew all along that our economy, our environment, our very way of life was at stake. Orsted has walked away from Ocean Wind One, but we are not walking away from this fight. We intend to redouble our efforts to ensure that our horizon remains free of massive offshore industrialization.”

Following a decision by its Board of Directors, Ørsted will cease development of the Ocean Wind 1 and Ocean Wind 2 projects and has taken final investment decision (FID) on the Revolution Wind project.

“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,” said David Hardy, Group EVP and CEO Americas at Ørsted. “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. I want to thank Governor Murphy and NJ state and local leaders who helped support these projects and continue to lead the region in developing American renewable energy and jobs.”

The decision to cease development of Ocean Wind 1 and Ocean Wind 2 is part of an ongoing review of Ørsted’s U.S. offshore wind portfolio with an update planned for its Q4 2023 results announcement. The company remains committed to the U.S. renewable energy industry, including offshore wind and land-based technologies. The board decided today to take FID on Revolution Wind, a 50/50 joint venture with Eversource.

“With our final investment decision, we’re solidifying our commitment to building our second commercial-scale offshore wind farm in the United States, helping to deliver more American energy and American jobs,” Hardy added. “I want to thank our Ørsted employees who helped achieve FID for Revolution, as well as our team at South Fork Wind building New York’s first offshore wind farm, our New Jersey team that worked tirelessly to advance these projects, and our land-based team delivering across our portfolio. As we manage and deliver in a challenging market, our team of experts sets itself apart.”

Included below is a summary of the company’s offshore wind energy projects in the U.S.

Ocean Wind 1 and 2 (1100MW project and 1148 MW projects)

Ørsted has decided to cease the development of Ocean Wind 1 and 2. The projects have experienced significant impacts from macroeconomic factors, including high inflation, rising interest rates and supply chain constraints, particularly a vessel delay on Ocean Wind 1 that considerably impacted project timing. The company intends to retain the seabed lease area and consider the best options as part of the ongoing portfolio review.

Revolution Wind (704MW project in a JV with Eversource)

Building on its commitment to renewable energy in the U.S., Ørsted agreed today to take FID on Revolution Wind. Onshore construction has started, and offshore construction will start in 2024, with the project expected to be completed in 2025. Revolution Wind will create thousands of direct and indirect jobs as well as permanent operations and maintenance jobs across Connecticut and Rhode Island. Once complete, the project will deliver 400 MW of clean energy to Rhode Island and 304 MW of clean energy to Connecticut, combining to power more than 350,000 homes.

South Fork Wind (130MW project in a JV with Eversource)

South Fork Wind continues its construction to progress toward operations, with the offshore substation and all the turbine foundations installed and onshore construction complete. The loading of components for the first turbine was completed on October 30 and plans are underway for sail away to install the first turbine, with all 12 expected to be installed by the end of 2023 or early 2024.

Sunrise Wind (880MW project in a JV with Eversource)

The company welcomes NYSERDA’s request for information (RFI) for an accelerated solicitation for offshore wind capacity, which could provide an opportunity to rebid Sunrise Wind. It is encouraging to see the state advance a potential rapid process as it recognizes the urgent action needed to keep New York’s offshore wind ambitions on track for job creation and climate goals. This is especially important because keeping early projects like Sunrise Wind on current timelines is linked to the success of subsequent projects that will rely on infrastructure, manufacturing and trained workers enabled by these projects. This RFI process could help address macroeconomic factors impacting the project, including a price level that reflects current component and financing costs. The company will assess the conditions of the RFP and determine whether to proceed with a rebid or not.

Skipjack Wind

Ørsted continues to reconfigure this project and expects to have more clarity on its path forward in the coming months as discussions continue with stakeholders in Maryland.

“We remain committed to the U.S. renewable energy market, building clean power that will create jobs across technologies and states from the Northeast to Texas,” Hardy said. “Offshore wind energy remains an integral solution to helping the U.S. meet its clean energy ambitions, including job creation, a domestic supply chain and a reinvigorated maritime industry.”

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