Offshore wind developer Orsted scraps both of its N.J. projects in a stinging blow to Murphy administration

Global offshore wind developer Orsted said Tuesday night that it is pulling out of both of its projects scheduled to be built off the coast of New Jersey, a move that enraged Gov. Phil Murphy and could be a big blow to the state’s renewable energy ambitions.

The Danish company made the announcement after a decision by its board of directors. Both the Ocean Wind 1 and 2 projects, which would have had the capacity to produce 2.2 gigawatts of renewable energy, will be scrapped.

“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,” said David Hardy, Group Executive Vice President and CEO Americas at Orsted. “As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2.”

Hardy said the company was disappointed and thanked Murphy and other state leaders who tried to kick start the industry in the state, hoping to make it a hub for offshore wind in the Northeast.

Orsted is, however, proceeding with other wind projects in the U.S. and internationally.

“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” Murphy said in a statement. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.”

Murphy said his administration is looking “to review all legal rights and remedies and to take all necessary steps to ensure that Orsted fully and immediately honors its obligations.”

Orsted was approved to build Ocean Wind 1, an 1,100-megawatt project that included a 98-turbine wind farm to be built about 15 miles off the coast of Atlantic City. At the time of its approval, it was set to be one of the largest wind farms built in the U.S., generating enough power for about 500,000 homes. The cables were to be run onshore at the just imploded B.L. England power plant in Somers Point and the Bureau of Ocean Energy Management (BOEM) had approved an environmental permit for Ocean Wind I.

» READ MORE: The landmark B.L. England smokestack was imploded to make room for an off-shore wind facility and more

The company was also slated to build Ocean Wind 2, a 1,148-megawatt offshore wind farm, also with the capability of supplying energy to 500,000 homes.

Orsted has been facing headwinds both economically and politically, as residents and officials in towns along the coast rallied against the wind farms, saying they would disrupt the views, Shore economy and wildlife.

Newly formed groups coalesced against wind, with some backed by fossil fuel interests, aiming to sway public opinion against the farms. The groups, often aligned with Republicans, managed to convince much of the public that offshore wind survey vessels were killing and stranding whales — despite offering no scientific evidence. The National Oceanic and Atmospheric Administration said most whale deaths are attributed to vessel strikes and fishing gear entanglement.

“The Brigantine community is happy to see Orsted pull out of New Jersey,” Brigantine Mayor Vince Sera said. “These ocean wind projects are bad for the environment, bad for our economy, and have no positive impact on climate change or global warming.”

Orsted has been meeting for years with stakeholders, including community groups and commercial and recreational fishing operations to assuage their fears. The state under Murphy’s guidance has sunk $1 billion in building the New Jersey Wind Port in Salem County and support for a monopile facility built by EEW at the Paulsboro Marine Terminal in Gloucester County. Monopiles serve as the foundations for turbines.

State officials said offshore wind would bring thousands of jobs.

Jeff Tittel, a longtime activist and supporter of renewable energy in the state, called Orsted’s announcement “a devastating setback for offshore wind in New Jersey and Gov. Murphy’s Clean Energy Agenda.”

But Tittel said Orsted had mishandled the projects, failing to fully listen to the public.

“They didn’t listen to the public and did not understand our needs or politics,” Tittel said. “They thought that the would get a blank check. Their arrogance is why these projects failed.”

State Sen. Vince Polistina (R., Atlantic), who has made opposition to offshore wind a campaign issue, said: “I want to applaud the concern by so many people in Atlantic County who had questions about the costs of the project, the impact on utility rates, and how the work was affecting our marine environment.”

The Murphy administration had set an aggressive goal of obtaining 100% clean energy by 2035. Offshore wind was a major part of that goal.

But Orsted said economic factors had taken too sharp a turn in recent months, including delays in construction of a needed vessel. The company still, however, retains its New Jersey lease on the seabed and will “consider the best options as part of the ongoing portfolio review.”

It’s unclear what impact Orsted’s withdrawal will have on projects by Atlantic Shores Offshore Wind. The company is set to build farms off the coast of New Jersey and New York. One, a 1,500-megawatt project to be built off coast of Atlantic City, is scheduled to power 700,000 homes by 2027 and 2028.

Orsted stands to lose a $100 million guarantee it posted with New Jersey earlier this month that it would build Ocean Wind I by the end of 2025, according to the Associated Press. That money could be returned to ratepayers.

Orsted had already warned over the summer about the financial troubles its New Jersey projects faced. It and other offshore wind developers had been pushing for federal tax credits that the state said must be returned to ratepayers. Murphy and legislators intervened to help make that happen but angered Republicans in the process.

Ed Potosnak, executive director of the New Jersey League of Conservation Voters, called Orsted’s decision “disappointing,” but noted, as did Murphy, that the company had posted $300 million in performance bonds on the project.

“I expect Orsted to make good on their payment obligation due to their failure to finish the much needed clean and reliable offshore wind projects,” Postosnak said. “Every new industry has its setbacks, and while New Jersey didn’t lose a penny to Orsted, we did lose the good paying jobs, improved health outcomes, and the energy independence the offshore wind projects would have provided.”