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Orsted Pulls the Plug on Two Offshore Wind Projects in New Jersey

Orsted recently announced the cancellation of two wind projects totaling 2,248 megawatts that were slated to be built in waters off the New Jersey coast.

At the same time, the Danish developer also released updates on its other offshore wind project along the Eastern Seaboard, including a final investment decision on an offshore wind project in Connecticut and Rhode Island.

“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,” David Hardy, group executive vice president and chief executive officer, Americas, at Orsted, said in a statement.

“As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2,” hardy said. “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.”

Ocean Wind 1 was designed as a 1,100-MW project and Ocean Wind 2 as a 1,148-MW project. In addition to negative macroeconomic factors, Orsted cited a vessel delay on Ocean Wind 1 that “considerably impacted project timing.”

The company said it intends to retain the seabed lease area and consider the best options as part of the ongoing portfolio review.

Orsted said the announcement was part of an ongoing review of its offshore wind portfolio in the United States and that it plans an update for its fourth quarter earnings results. The company added that it “remains committed to the U.S. renewable energy industry, including offshore wind and land-based technologies.”

Orsted said its final investment decision on the 704-MW Revolution Wind project, a joint venture with Eversource, will allow offshore construction on the project to begin in 2024. Onshore construction has already begun. When completed, the project, which is sited in waters of the coasts of Connecticut and Rhode Island, will deliver 400 MW of energy to Rhode Island and 304 MW of energy to Connecticut.

Orsted said another joint venture offshore project with Eversource, the 130-MW South Fork Wind project in New York, is under construction with all turbine foundations installed and onshore construction complete.

Orsted just shipped the first turbine to the offshore site and expects all 12 turbines to be installed by the end of 2023 or early 2024. The South Fork project is New York’s first offshore wind farm and was selected under a 2015 Long Island Power Authority request for proposals to address growing power needs on the east end of Long Island.

Last month, the New York State Public Service Commission denied petitions for additional funding for four proposed offshore wind projects and 86 land-based renewable projects that were seeking offsets for unexpected higher costs. The petitions sought adjustments to Renewable Energy Credit and Offshore Wind REC purchase and sales agreements entered with the New York State Energy Research and Development Authority to address inflationary pressures affecting project economics. The petitions were submitted by Empire Offshore Wind LLC and Beacon Wind LLC, Sunrise Wind LLC, and the Alliance for Clean Energy New York, Inc.

In its announcement, Orsted said it “welcomes NYSERDA’s request for information for an accelerated solicitation for offshore wind capacity, which could provide an opportunity to rebid Sunrise Wind.” Orsted is developing the 880-MW Sunrise Wind project with Eversource in ocean water 30 miles east of Montauk, New York.

The potential rebidding of the project is “especially important,” Orsted said, “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.”

Orsted said it “continues to reconfigure” its Skipjack offshore wind project in Maryland and “expects to have more clarity on its path forward in the coming months as discussions continue with stakeholders in Maryland.”