New Jersey has gone from the aspirational epicenter for offshore wind to a graveyard of Ørsted projects. | Kelsey Tamborrino/POLITICO
The cancellation of one of the largest offshore wind projects in U.S. history is dealing another blow to a fledgling industry that’s key to the Biden administration’s climate goals.
Danish wind developer Ørsted announced late Tuesday that it is no longer moving forward with Ocean Wind, a pair of projects off the New Jersey coast that would have provided power to about 1 million people.
CEO David Hardy cited high inflation, rising interest rates and supply chain bottlenecks as leaving the company “no choice but to cease development.“
“We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy,” Hardy said in a news release.
The bigger picture
The cost concerns are not unique to Ørsted, writes Ben Storrow. Other offshore wind developers along the East Coast have canceled or tried to renegotiate their power contracts with states in recent months, putting a spotlight on the industry’s economic headwinds.
Such challenges could jeopardize President Joe Biden’s goal to build 30,000 megawatts of offshore wind by 2030. The White House and congressional Democrats have tried to ease the way for the industry through the landmark Inflation Reduction Act, which poured billions of dollars into boosting clean energy projects.
But those funds, and how they are allocated to developers, may not be matching up with the support that offshore wind companies say they need to ensure their investments make economic sense, Ben writes.
For example, Ørsted has said it might not qualify for some of the law’s tax credits under the IRS’s proposed rules.
The White House has expressed confidence the industry will overcome such struggles. Hours before Ørsted’s announcement, the Interior Department approved its fifth — and largest — offshore wind project, writes Heather Richards.
Slated for off the coast of Virginia Beach, the Dominion Energy project would provide power to about 660,000 homes and expand offshore wind development southward along the Atlantic coast.
On Tuesday, Interior Secretary Deb Haaland pointed to the Coastal Virginia Offshore Wind project as proof of the “undeniable momentum” of the administration and the U.S. offshore wind industry.
“We are aggressively working toward our clean energy goals,” Haaland said.