- Danish wind developer Orsted has reached a $100 million settlement to finish the state’s first offshore wind farm by December 2025.
- The deadline was set a full 12 months later than beforehand accredited by utility regulators.
- Orsted has already acquired state approval for a second offshore wind venture.
Danish wind vitality firm Ørsted has offered a $100 million assure to construct New Jersey’s first offshore wind farm.
However it would lose that cash if the venture is just not up and operating by December 2025, a 12 months after the deadline accredited by state utility regulators.
The New Jersey Board of Public Utilities on Wednesday accredited an settlement with Ørsted underneath which the corporate will forfeit funds if the venture is just not up and operating inside 12 months of a collection of deadlines beforehand requested by the board.
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These deadlines name for the venture to succeed in industrial operation in phases by Might 1, September 1 and December 1, 2024. However it would lose escrow cash if the venture is just not operational by December 2025.
The cash Ørsted offered on Oct. 4 and positioned in an escrow account was required underneath the phrases of a legislation signed by Gov. Phil Murphy in July, permitting Ørsted to maintain federal tax credit that she would in any other case need to return to New Jersey taxpayers. .
The Democratic governor, who needs to make New Jersey an East Coast hub for the rising offshore wind business, mentioned the tax break is crucial. He mentioned it might assist Ørsted full the venture within the face of the monetary challenges plaguing the business. It additionally faces important political opposition, largely from Republican lawmakers and their supporters.
For instance, New York regulators on Thursday rejected a request from corporations for bigger subsidies to finish large-scale wind, photo voltaic and offshore wind tasks, saying they count on the businesses to stick to the phrases of their offers with the state.
The New Jersey Utilities Board’s approval on Wednesday “continues the method of complying with the authorized necessities set forth in laws signed by Governor Murphy earlier this 12 months,” Ørsted mentioned in an announcement.
Nevertheless it has not set its personal timeline for finishing the primary two offshore wind tasks it plans to construct off the coast of New Jersey.
In August, Ørsted mentioned the venture could be delayed till 2026 resulting from provide chain issues, excessive rates of interest, and the failure up to now to acquire adequate tax breaks from the federal authorities.
The corporate mentioned throughout an earnings convention name that it might have to write down off about $2.3 billion in U.S. tasks which are price lower than they have been. She additionally mentioned she thought of merely abandoning the Ocean Wind I venture off the southern New Jersey coast, however determined to keep it up for now.
The corporate didn’t reply to repeated requests Wednesday and Thursday to make clear its timeline for the venture. Its web site says solely: “The venture is scheduled to start operation in 2025, with last operation in 2026.”
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An affidavit submitted to the board final month by David Hardy, CEO of Boston-based Orsted North America, dedicated the corporate to implementing the venture as soon as the board accredited the assure, which it did on Wednesday.
“I can affirm that Ocean Wind I’ll full and fee the Ocean Wind I venture with an approximate capability of 1,100 MW,” he wrote.
Ørsted has acquired federal approval for the Ocean Wind I venture, and has acquired state approval for a second venture in New Jersey, Ocean Wind II. Beneath Wednesday’s settlement, the corporate will obtain $100 million if it doesn’t receive all the federal government approvals it must construct and function the primary venture.
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If Ørsted loses the cash, it might be returned to New Jersey utility ratepayers.