New Jersey is starting new offshore wind projects after two major developments effectively failed in 2023.
The state’s utility regulators green lit two major contracts on Wednesday in a bid to revitalize the state’s offshore wind dreams, months after Orsted — one of the largest offshore wind developers in the world — pulled the plug on two massive projects off the New Jersey coast in October 2023, the New Jersey Board of Public Utilities (NJBPU) announced Wednesday.
As of November 2023, New Jersey was engaged in a dispute with the company over $300 million, which the state says is owed.
The two developments selected are Invenergy and energyRE’s Leading Light Wind Project and Attentive Energy LLC’s Attentive Energy Two Project, according to the NJBPU. The state is banking on the projects to eventually supply enough electricity to power 1.8 million homes.
Inflation, high borrowing costs and logistical problems plagued Ørsted’s projects for months before the company decided it had no other choice but to walk away from its investment. The company previously agreed to pay $200 million to build wind-related facilities in southern New Jersey and set aside $100 million to pay the state in the event it cancelled its projects, but the company was attempting to work its way out of those liabilities as of November 2023.
The new contracts are designed to insulate against the risks of future cancellations, according to E&E News. The deals include provisions that account for inflationary pressures, while also requiring Attentive to put up a $67 million security and mandating that Leading Light put up its own security of $120 million.
The newly-contracted projects are also expected to increase utility rates in the state. Residential electricity rates are expected to jump by $6.84 per month, commercial rates would increase by $58.73 per month and monthly industrial rates would rise by $513.22, according to E&E News. One of the two terminated Ørsted contracts would have been about half as expensive for residential ratepayers, according to The New York Times.
The new contracts are “undeniable proof that the future of offshore wind in New Jersey is as strong as ever,” Democratic New Jersey Gov. Phil Murphy said. “From our talented workforce to our growing standing as a regional supply chain hub, our state remains an unparalleled location for the top developers in the world to plant their flags. In addition to bringing good-paying jobs and environmental benefits to the Garden State, these projects will significantly advance our pursuit of a 100% clean energy economy by 2035.”
Murphy’s office and the NJBPU did not respond immediately to requests for comment.