Offshore wind developer Orsted has decided to back out of two controversial projects along the coast of New Jersey. The Danish company will cease development of the Ocean Wind 1 and 2 projects, citing factors such as inflation, rising interest rates and supply chain issues as reasons for this decision.
Orsted could lose the $100 million guarantee it posted with New Jersey, which ensured Ocean Wind 1 would be operational by the end of 2025. That money could go back to taxpayers. According to The New York Times, Orsted says it could write off as much as $5.6 billion.
“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.” Group Executive Vice President and CEO of the Americas Region David Hardy said in a statement,
New Jersey Gov. Phil Murphy is a strong supporter of offshore wind development. In a statement, Murphy called the decision “outrageous” and questioned Orsted’s credibility and competence.
“In recognition of the challenges inherent in large and complex projects, my administration in partnership with legislative leadership insisted upon important protections that ensure New Jersey will receive $300 million to support the offshore wind sector should Orsted’s New Jersey projects fail to proceed,” Murphy said.
Orsted intends to proceed with other offshore wind projects along the East Coast.
The company is not alone in facing financial challenges. International energy company Equinor recently wrote down the value of its U.S. projects by $300 million, and BP announced it would write down three projects off the coast of New York by $540 million. BP’s head of gas and low carbon commented that the offshore wind industry in the U.S. is “fundamentally broken.”
