SEASIDE HEIGHTS, NJ – According to a Politico article by Ry Rivard, the Danish wind developer responsible for constructing New Jersey’s first industrial offshore wind farm is seeking additional funds from state taxpayers before proceeding with their project to industrialize the state’s inshore waters.
Rivard reported from a Board of Public Utilities (BPU) meeting, where the five-member board began accepting proposals for new wind farms off the coast of New Jersey. During the meeting, it was revealed that the governor and the wind developer were renegotiating previously agreed-upon terms.
The negotiations between the Murphy administration and Ørsted, the Danish energy giant, have been ongoing to ensure the financial sustainability of the state’s first offshore wind farm. Ørsted is seeking to modify a portion of the 2019 deal made with the BPU, citing factors such as inflation, interest rates, and supply chain challenges. However, the specific details of Ørsted’s requests from the state have not been disclosed publicly. Two BPU commissioners revealed that Ørsted aims to retain federal tax incentives from the Inflation Reduction Act, which could cover up to 40% of construction costs.
In 2019, the BPU approved Ørsted’s plan to install 100 turbines 15 miles off the coast of South Jersey. Known as Ocean Wind 1, the project is reliant on financial support from New Jersey ratepayers, who would see an increase of approximately $1.50 per month on their residential power bills. Ocean Wind 1 is the first of several proposed industrial wind farms along the Jersey Shore and is expected to be completed by 2025. However, construction has not yet commenced, and Ørsted is concerned about the project’s profitability.
BPU Commissioner Dianne Solomon expressed concerns during the board meeting, stating that the board had previously been assured that any federal funds would be used to offset the cost for ratepayers. However, it appears that Ørsted is seeking a change in these terms from state officials, potentially involving the Legislature. Solomon noted that there were indications that legislators were inclined to return the funds to the developer instead.
Ørsted spokesperson Tory Mazzola informed Politico that the company is engaging in discussions with state policymakers to explore options that can effectively advance and deliver on clean energy goals. Mazzola cited challenges such as high inflation, rising interest rates, and supply chain constraints, which are affecting long-term capital projects, including Ocean Wind 1.
Rivard highlighted the potential consequences if altering the agreement results in additional financial burdens on ratepayers to provide more money to Ørsted. Even minor changes could cost ratepayers hundreds of millions of dollars. Ocean Wind 1, along with two other offshore wind projects, including Ørsted’s Ocean Wind 2, are scheduled to be operational by 2035, which aligns with Governor Phil Murphy’s 100% clean energy plan. The approaching deadline may explain why the governor is also seeking to revamp the BPU.
Furthermore, Politico reported that Governor Murphy intends to overhaul the BPU by replacing three out of the five commissioners as his administration enters its final years, while his environmental legacy remains uncertain. The article stated that Murphy nominated two new commissioners to replace former state Sen. Bob Gordon, who had been on the board since 2018, and Dianne Solomon, who was nominated to the board a decade ago by former Governor Chris Christie. Murphy has been trying to replace Solomon for over a year, as she is the only BPU member who was not nominated or reappointed by him.