Orsted will pay N.J. $125M for pulling out of wind projects

New Jersey Gov. Phil Murphy’s office announced Tuesday that global renewable energy giant Orsted will pay the state $125 million for pulling out of two offshore wind projects off the coast last year, a move that upended a key part of the state’s clean energy program.

Murphy’s administration said it plans to use the money to further support offshore wind projects by investing in manufacturing facilities and other clean energy programs. It also announced plans for a fifth offshore wind project.

The settlement is less than half the $300 million Orsted originally guaranteed if it failed to build the first wind farms off the state’s coast.

Administration officials could not be reached immediately for comment.

Orsted said the settlement, along with other wind-related developments in the state, “underscores New Jersey’s commitment to offshore wind and the industry’s bright future in the Garden State.”

Doug O’Malley, director of the nonprofit advocacy group Environment New Jersey, said that while the settlement fell short of the amount Orsted owed, it “is a good down payment on expanding the offshore wind supply chain.”

In October 2023, the Danish-based Orsted announced that it had scrapped its much anticipated Ocean Wind 1 and 2 projects, which would have had the capacity to produce 2.2 gigawatts of renewable energy. Ocean Wind 1 would have been the first of multiple offshore wind projects designed to meet Murphy’s goal of achieving 11 gigawatts of the renewable energy by 2040 — enough to power millions of homes. The two projects would have been located off the coast of Atlantic City.

As part of the deal, Orsted had signed an agreement that it would complete the wind farms. The $125 million is a resulting settlement of the state’s claim against the company for breaking that agreement. At the time, Orsted cited “macroeconomic factors” including high inflation, rising interest rates, and supply chain bottlenecks that forced it to kill the projects.

Atlantic Shores Offshore Wind, a partnership between Shell New Energies and EDF-RE Offshore Development, has the offshore wind projects closest to starting construction. Installation of the foundations for the turbines is expected to start in 2026.

The partnership’s two New Jersey-based projects would be built between Atlantic City and Barnegat Light. Together, they would power more than one million homes. Last week the federal Bureau of Ocean Energy Management released the final environmental impact statements for Atlantic Shores Project 1 and 2 — a major hurdle.

But the Atlantic Shores projects have received pushback from Shore-area residents who say the turbines would mar their views. Some groups have claimed offshore wind activity, such as surveying of the ocean floor, has caused whale deaths, although most scientists dispute that.

The wind turbine areas span 102,000 acres, with the closest area about 9 miles from the New Jersey shoreline. There could be up to 200 wind turbines reaching up to nearly 1,000 feet high.

In January, the state’s Board of Public Utilities approved two more offshore wind projects: the 1.3 gigawatt Attentive Energy Two project about 47 miles off the coast of Sea Girt and the 2.4 gigawatt Leading Light Wind project about 40 miles offshore of Long Beach Island.

And on Tuesday, the Murphy administration announced that it is seeking a fifth offshore wind project capable of generating between 1.2 and 4 gigawatts of power. It says offshore wind will result in thousands of jobs for construction, maintenance, supply chain, and manufacturing. Officials did not give a proposed location.