Ørsted Agrees to Pay $125M Settlement to Cancel New Jersey Wind Farms
Seven months after announcing it was walking away from two large offshore wind farms planned for New Jersey, Ørsted and the New Jersey Board of Public Utilities agreed to settle their claims for a fraction of the total guarantees the company issued the state. The company will pay $125 million to settle all claims with the state and to release claims made against each other after Ocean Wind 1 and Ocean Wind 2 were canceled in what has become known as a Halloween surprise on October 31, 2023.
Ørsted was moving forward with the development plans for what were going to be the first two offshore wind farms in New Jersey. Ocean Wind 1, which was to have been located near Atlantic City, was the most advanced of the projects. It called for 98 turbines with a total capacity of 1.1 GW to power about 500,000 homes. The second phase, Ocean Wind 2, was a similar project with a projected capacity of 1.15 GW. Ørsted cited increased costs due to inflation and supply chain problems announcing would write off the projects as part of an anticipated total impairment of approximately $5.5 billion to restructure its offshore wind portfolio.
Ørsted had entered into a $100 million guarantee and total commitment of $300 million with New Jersey assuring the state that the projects would be completed on time. Under the terms of the agreement, the company would forfeit the guarantees by not proceeding with the projects, but days later it said it wanted the $200 million portion returned.
New Jersey Government Phil Murphy angrily said they would move to ensure the company honored its obligations in full. He called the company’s decision to abandon its commitments “outrageous.”
The Board of Public Utilities said today the $125 million settlement with the company will be used to support investments in qualified wind energy facilities, investments in offshore wind component manufacturing facilities, and other clean energy programs.
At the same time, New Jersey highlighted its efforts to accelerate its programs for renewable wind energy. The state currently has a fourth solicitation underway due to close July 10 seeking 1.2 to 4 GW. They also announced plans to accelerate the fifth solicitation which had been scheduled for Q3 2026. New Jersey plans to hold that round in Q2 2025.
“Offshore wind development remains a once-in-a-generation opportunity that will result in significant economic and environmental benefits throughout the Garden State,” said Governor Murphy in a statement issued today. “At this pivotal inflection point for the industry both in New Jersey and across the nation, it’s critical that we remain committed to delivering on the promise of thousands of family-sustaining, union jobs, and cleaner air for generations to come.”
The Bureau of Ocean Energy Management announced last week that it has completed the final environmental review for New Jersey Atlantic Shores wind farms. It is a key step to move those projects forward with approval of the construction and operation plan still required. Atlantic Shores would initially provide 1.5 GW and possibly a total of 2.8 GW but it is not likely to start commercial operations until 2027 and 2028.