Ørsted to Acquire PSEG’s Equity Share in NJ Offshore Wind Farm
Ørsted’s U.S. operations and New Jersey’s Public Service Enterprise Group (PSEG) announced a change in the ownership structure for one of the first offshore wind projects in the U.S. that is nearing completion of its permitting process and the start of construction. According to the companies, the change of ownership was an economic decision as the wind industry matures and new tax and financial programs are developed by the U.S. to accelerate the development of offshore wind resources.
The site today known as Ocean Wind 1 located 15 miles off the southern coast of New Jersey was part of a November 2015 auction held by the Obama administration in the early days of wind development. The lease was awarded for a winning bid of $880,715, with lease negotiations completed in 2016 for the area that is approximately 160,000 acres near Atlantic City, New Jersey. It is expected to have a generating capacity of 1,100 MW when it starts operations in 2024 and is in full commercial operations in 2025.
The project has been making progress in the long process leading up to the permitting and construction. In 2017 the site plan was submitted. New Jersey and BOEM have been reviewing the site and construction plan along with the environmental impact statements. Construction is expected to begin in 2023.
“As Ocean Wind 1 has evaluated the optimal way to move forward, it has become clear that it is best for the project for PSEG to step aside and allow for a better positioned tax investor to join the project so that it can proceed with an optimized tax structure,” said PSEG’s Senior Vice President and Chief Commercial Officer Lathrop Craig. “While this was a difficult decision, it was driven by the best interests of the project and New Jersey’s offshore wind goals. PSEG will continue to actively support offshore wind in New Jersey and the region.”
The companies reach an agreement for Ørsted to acquire the 25 percent equity stake in Ocean Wind currently held by PSEG. The acquisition provides Ørsted with 100 percent ownership of Ocean Wind 1 and follows a move in late 2021 that assigned a portion of the lease to Ørsted. Independently, Ørsted also won a second lease to the north of the first site which it calls Ocean Wind 2. The second project is slated to provide a further 1,148 MW and start construction in 2028.
“PSEG has been a valuable partner as we have advanced Ocean Wind 1 to this point and as we’ve successfully advanced our offshore wind vision in the United States. With a well-established presence in the U.S., we’re confident in our ability to drive the project forward with commercial operations beginning as planned,” said David Hardy, Group EVP and CEO Americas at Ørsted.
Ocean Wind 1 continues its planning and development and Ørsted said it will ensure the project delivers affordable energy to New Jersey while providing economic opportunity across the state and region. PSEG remains committed to Governor Murphy's clean energy policies and President Biden's goal of deploying 30 gigawatts of offshore wind by 2030. The company will continue to help the state and nation realize offshore wind's tremendous potential through transmission solutions, support for the New Jersey Wind Port, and PSE&G's clean energy investments.
The transaction between Ørsted and PSEG is expected to close in the first half of 2023, pending the required closing conditions.