New Jersey will receive $125 million from Ørsted — instead of the $300 million originally planned — after settling with the Danish developer who abandoned plans for two offshore wind farms.
State officials coupled the deal’s announcement Tuesday afternoon with news that it would speed up the window for more offshore wind projects to come to fruition off the state’s coast and a transportation planning update.
“Governor Phil Murphy is pleased that this matter was resolved without litigation and that the state will receive $125 million from Ørsted. He is grateful to his legislative partners who included protections in the legislation that enabled a recovery of this magnitude, even though Ørsted did not take advantage of federal tax credits due to the cancellation of the New Jersey projects.” , Natalie Hamilton, a spokesperson for the governor, said Tuesday afternoon in an email.
“Advancing the fifth solicitation schedule demonstrates that despite this,” she added, “New Jersey remains on track to become a national leader in the growing offshore wind industry.”
A copy of the settlement agreement was not immediately provided.
Murphy, a Democrat, previously said the state would “fight like hell” to keep the $300 million it is owed.
Asked about the settlement on his television show Tuesday afternoon on News 12 New Jersey, Murphy said the state was “successful” in getting Ørsted to pay for removing the project.
“I’m happy with the amount,” he said. “They got nothing out of it.”
Ørsted canceled two offshore wind farms last October, throwing the state’s burgeoning clean energy ambitions into confusion.
Besides what the cancellation meant for the Garden State economically and for Murphy politically, the large sum of money had also entered a sort of limbo.
As part of a billion-dollar tax incentive law, Ørsted put $200 million on deposit for supply chain and manufacturing investments and established a $100 million parent company guarantee of dollars (or money given as collateral) as part of the guarantee that Ocean Wind 1 would happen.
If this were not the case, the law stipulated, the money would go to New Jersey, a spokesperson for the governor previously confirmed.
This law was designed to redirect federal tax credits – usually sent to taxpayers – to Ørsted, but only if what would have been New Jersey’s first offshore wind farm was operational by December 2025.
The money analysis was done to help the developer and others like it deal with unforeseen challenges – as the wind plans were launched before the COVID-19 pandemic and rising inflation has made projects much more difficult to finalize.
In a statement, an Ørsted spokesperson said the company was pleased with Tuesday’s announcement.
“Our joint settlement, along with the announcement that the fifth solicitation for offshore wind energy will have a new accelerated timeline, underscores New Jersey’s commitment to offshore wind energy and the industry’s bright future in the Garden State,” the company spokesperson said. “As we advance clean energy projects throughout the region, we look forward to continuing valuable partnerships with New Jersey stakeholders.”
Money from the settlement will go toward the state’s wind installations and other clean energy programs, the BPU and Murphy’s office said Tuesday.
Responding to the settlement online Tuesday, Sen. Joe Cryan, D-Union, said the $125 million should be used to offset taxpayer cost increases expected from offshore wind energy projects.
“Ørsted’s $125 million recovery settlement – although nowhere near the amount they owed New Jersey – is a good down payment for the expansion of the offshore wind supply chain,” said Doug O’ Malley, director of Environment New Jersey, told NJ Advance Media in a statement. “Ørsted owed more, but it is unclear whether they could have been forced to pay the entire bill.”
Jeff Tittel, a longtime environmental activist in the state, was more critical and said the settlement seems “more of a sellout than a good deal for the people of New Jersey.”
“The governor said they will be held accountable for the entire $300 million they owe the state for their failed project,” Tittel said. “They are once again absolved of responsibility by paying less than half, with New Jersey losing $175 million.”
State Senate Minority Leader Anthony Bucco, R-Morris, said it was “troubling” that the state did not get back the full $300 million.
“Why we agreed to $125 million is a question that needs to be answered. I get it: Litigation is expensive and unknown,” Bucco told NJ Advance Media. “But this administration continued to invest in Ørsted’s project even after learning it was in trouble.”
Still, former state Senate President Stephen Sweeney, a Democrat who helped promote wind energy development and is now running to succeed Murphy as governor next year, said that it was “unrealistic” to expect the money to be repaid in full.
“I think they did a great job on the settlement,” Sweeney told NJ Advance Media. “There was no guarantee of victory. To get (money) and advance the next cycle of offshore wind, I think it’s critically important to keep the momentum going. We will get there.
Tittel said by telephone that he is also aware of the “turmoil” facing the offshore wind industry in general and what last year’s withdrawal meant in financial losses for wind ports in Salem County and Paulsboro.
However, in a recent positive development, the latest offshore wind approvals also included an agreement to provide $164 million for the Paulsboro Monopile Port and a commitment to also use the Salem County facility.
A whiff of news
In addition to the settlement, the state also announced it would once again speed up the deadline for developers to propose additional offshore wind projects.
Anjuli Ramos-Busot, state director of the Sierra Club, said Tuesday that it is “critical that we continue to advance the responsible and equitable development of offshore wind energy to ensure a future of energy independence and jobs to maintain families. investments in workforce development and improved public health.
The wind farms have been criticized by various local groups on the Jersey Shore, some with ties to fossil fuel interests, due to the unproven link between the survey work and the deaths of large whales. Projects intended to harness the power of wind have also been championed by environmentalists.
The fifth solicitation window for offshore wind, initially scheduled to start in the third quarter of 2026, will now run from April to June 2025.
The fourth window is currently open until July 10.
“At this crucial inflection point for the industry, both in New Jersey and across the country, it is critical that we remain committed to delivering on the promise of thousands of family-sustaining union jobs. “cleaner air for generations to come,” Murphy said in a statement Tuesday.
Currently, three offshore wind projects have received state approval ahead of additional permits required for construction.
The furthest along project belongs to Atlantic Shores, which last week received a final environmental impact statement from the Bureau of Ocean Energy Management. Atlantic Shores wind turbines may not start producing electricity until 2028.
The state BPU also said Tuesday it would pause to advance the “Second State Agreement Approach” (SAA) for coordinated offshore wind transmission planning with regional grid operator, PJM Interconnection .
“The decision to pause follows the Federal Energy Regulatory Commission’s issuance of Order 1920 which addresses long-range regional transmission planning and the ongoing interconnection queue reform process of PJM, each of which impacts planning and costs,” the state said in a summary.
The BPU said this pause will help commissioners and staff evaluate next steps.
O’Malley also questioned the fate of the Ørsted wind farm off the coast of Atlantic City on Tuesday.
“The potential for offshore wind is still as strong as the day Ørsted canceled its project last fall, and the risks from sea level rise are still as great as ever,” he said. declared. “Ørsted should sell its lease as quickly as possible – there is clear interest from other developers in the area who could power hundreds of thousands of homes with clean energy.”
Ørsted officials have not announced their intentions regarding the rental areas.
EDITOR’S NOTE: The headline has been changed to more accurately describe the financial agreement between the state and Ørsted.
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Steve Rhodes can be reached at srodas@njadvancemedia.com. Follow him on @stevenrodasnj.
Brent Johnson can be reached at bjohnson@njadvancemedia.com. Follow him on @johnsb01.