NJ, Ørsted settle claims over Ocean Wind cancellation

New Jersey state officials say they have settled their claims against offshore wind developer Ørsted, seven months after the company’s sudden cancellation of its Ocean Wind project sent shockwaves through the industry.

 Ørsted will pay $125 million to the state and New Jersey Board of Public Utilities for dropping the Ocean Wind 1 and Ocean Wind 2 projects – less than half the $300 million that New Jersey Gov. Phil Murphy vowed he would pursue after his administration felt blindsided by the company’s Oct. 31 announcement.

 The first 1,100-megawatt Ocean Wind 1 phase was seen as a flagship project by both the Murphy administration and the industry at large. Ørsted officials pulled the plug in the face of sharply higher costs, supply chain uncertainty and other issues.

 Those $125 million in settlement fees will be used to “support investments in qualified wind energy facilities,” offshore wind component manufacturing and other clean energy programs, according to a statement from Murphy’s office.

 News of the settlement was buried near the end of the governor’s statement, which opened on an optimistic note that the administration and BPU would speed up plans for the state’s fifth solicitation for offshore wind proposals from summer 2026 to spring 2025.

 “At this pivotal inflection point for the industry both in New Jersey and across the nation, it’s critical that we remain committed to delivering on the promise of thousands of family-sustaining union jobs and cleaner air for generations to come,” said Murphy.

 Murphy’s Republican critics in the state Legislature say the administration is doubling down on offshore wind at a time when the industry’s escalating costs cast doubt on the success of any project.

“Why we settled for $125 million is a question that needs an answer,” state Senate Republican leader Anthony M. Bucco wrote on a Facebook post.

 Beach resort communities like Long Beach Island and Ocean City, N.J., are hotbeds of local opposition, with property owners, tourism businesses and commercial fishermen working together to protest planning by developers, state energy officials and the federal Bureau iof Offshore Energy Management.

 Despite its setback, Ørsted still hold its federal leases for the Ocean Wind tract and opponents say they are mindful other developers could seek to develop it. In the meantime they are focusing their efforts on Atlantic Shores, a venture by Shell New Energies US LLC and EDF Renewables North America with more than 400 square miles under development.

BOEM announced its final environmental assessment for the Atlantic Shores 1 and 2 projects May 22.

 “Ørsted made the decision to cancel their planned projects once they realized they were not economically viable or feasible in South Jersey and I expect Atlantic Shores to soon face the same harsh reality,” said Rep. Jeff Van Drew, R-NJ, whose New Jersey Congressional district includes that coastline. “Offshore wind has absolutely no place in South Jersey, and I will never stop fighting until these misguided projects are permanently stopped."