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November 01, 2023

Orsted abandons New Jersey offshore wind projects, citing rising costs

The proposed green energy sources would have powered hundreds of thousands of homes. The company's decision to nix its plans brought a mix of reactions from public officials

Environment Energy
NJ wind farm project axed MAGDA EHLERS/PEXELS.COM

Orsted, the Danish green energy company that was planning to build offshore wind turbines off the New Jersey coast, ditched those proposals Wednesday, citing high costs and the impact of inflation. The above photo is a stock image showing a wind turbine.

Plans to build a pair of wind farms off the New Jersey coast have been caste aside by the Danish green energy company that was spearheading them. 

Orsted revealed Wednesday morning that it has halted the projects, known as Ocean Wind 1 and Ocean Wind 2, and is writing off $5.6 billion in the process. The company blamed rapidly changing economic factors. 

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"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," Orsted Executive Vice President David Hardy said. "As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2." 

Last month, Orsted had put up a $100 million guarantee to make Ocean Wind 1 operational by December 2025. That project was to be built about 15 nautical miles southeast of Atlantic City. It would have provided power to more than 380,000 homes. 

Ocean Wind 2, which had not yet gained federal approval, was to be built to the north of Ocean Wind 1 and would have powered another 500,000 homes. 

The decision to ax the wind farm projects was met with mixed reactions among New Jersey leaders. Gov. Phil Murphy, a proponent, decried the company's change-of-plans, calling it "outrageous" and saying it raises questions about the Orsted's credibility, according to the Press of Atlantic City.

Some Jersey Shore mayors were not quite as upset. Brigantine Mayor Vince Sera told the newspaper that he was "happy to see Orsted pull out of New Jersey." Ocean City Mayor Jay Gillian was also has been a vocal opponent of the plans to line the shoreline with massive wind turbines.

The wind farm proposals had garnered opposition from some South Jersey politicians and sparked protests from activists. Some argued that the wind farms will damage the ocean ecosystem and threaten wildlife. These groups and some Republican leaders in the state have linked whale deaths and strandings to pre-construction surveying offshore, but the National Ocean & Atmospheric Administration and the federal Bureau of Ocean Energy Management say there's no scientific proof of a connection between them.

In early September, public opinion polls showed that 54% of New Jersey residents were in favor of building wind farms off the state's coastline, and 40% of residents were opposed to the plans.