TRENTON, NJ – Orsted, the Danish wind energy giant, announced the termination of its Ocean Wind 1 and 2 projects slated for development off the New Jersey coast. This decision poses a significant setback to U.S. offshore wind ambitions, aligned with President Biden’s green energy objectives.
The firm cited a confluence of adverse macroeconomic factors, including surging inflation, heightened interest rates, and persistent supply chain disruptions as the rationale behind halting these projects. David Hardy, the CEO of Americas at Orsted, expressed profound disappointment over the decision, particularly due to New Jersey’s strategic position in the offshore wind sector.
In a related move, Orsted revealed that it is proceeding towards a final investment decision on its Revolution Wind project near Rhode Island, with industry observers speculating on the potential implications for this and other projects.
The company’s financial difficulties came into sharp focus in late August, after a substantial writedown of over $2 billion on project valuations led to a steep decline in its stock value. Mads Nipper, Orsted’s CEO, had previously indicated the possibility of the company exiting U.S. ventures if the financial climate failed to improve.
The two projects represent 6% of the Biden Administration’s clean energy agenda goal.
The broader offshore wind industry has been grappling with economic challenges that could necessitate federal intervention to ensure its viability. The Biden administration’s goal of generating enough offshore wind energy to power 10 million homes by 2030 now faces increased pressure, as the scrapped projects accounted for a significant portion of the intended capacity.