Ørsted Americas, a Danish wind developer and industry leader, recently announced that it is halting development of two major offshore wind projects, proposed to be developed off of the shores of New Jersey (known as Ocean Wind 1 and Ocean Wind 2). A company statement blamed unfavorable changes in the economic conditions, including rising interest rates and supply chain issues. Industry commentators report other unfavorable conditions, including a strain on supplies like monopiles and other components, as well as long wait times for the ships needed to construct the wind turbines in the ocean.
Ørsted Americas CEO David Hardy issued a statement stating: “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.”
Ørsted’s decision will have an unwelcomed impact on New Jersey’s development of alternative energy to reduce carbon emission under the state’s Energy Master Plan. New Jersey Gov. Phil Murphy, a propone of offshore wind, was upset with Ørsted’s decision to abandon its commitments to New Jersey. Gov. Murphy said in a statement: “I have directed my Administration to review all legal rights and remedies and to take all necessary steps to ensure that Ørsted fully and immediately honors its obligations.”
Nationally, notwithstanding the Biden Administration’s support for offshore wind, the number of active turbines in U.S. waters remains in single digits, and the energy output is significantly behind solar and onshore wind. CNN reports there will be about 140 gigawatts of solar (including both utility scale and rooftop) installed in the US by the end of this year, while offshore wind will only generate 42 megawatts. Two commercial-scale offshore wind projects – Vineyard Wind off the coast of Massachusetts and South Fork Wind off the coast of New York – are currently under construction.
Earlier this week, the Biden administration announced it approved plans for Dominion Energy to build the largest offshore wind farm to-date in the United States off the coast of Virginia. The Dominion project, known as Coastal Virginia Offshore Wind, is planned to be a 2.6-gigawatt wind farm that could eventually generate enough electricity to power over 900,000 homes. Ocean Wind 1 would be the next largest project the administration had approved – expected to generate 1.1 gigawatts, enough to power over 380,000 homes.
