ATLANTIC CITY, NJ — Danish wind farm developer Orsted will pay New Jersey $125 million to settle claims over the company's cancellation of two offshore wind farms last year — just over a third of what the company once had to pay.
The state's Board of Public Utilities said Tuesday that New Jersey and Orsted have settled claims against each other stemming from the company's decision last October to demolish two wind farms off the state's south coast.
The state said the $125 million it will receive will be used to support investments in wind energy facilities, component manufacturing facilities and other clean energy programs.
Before the projects were halted, Orsted provided a $100 million guarantee that it would have one of these projects, Ocean Wind I, built by the end of 2025. It was also required to pay a further $200 million for the development of the offshore wind energy sector. industry in New Jersey.
A week after scrapping the projects last fall, Orsted said it was trying to get under $300 million in guarantees because it was no longer pursuing the projects.
Orsted said in a statement to The Associated Press that it is “pleased” with the settlement, which it said represents the company's total financial obligation to the state.
The agreement, along with other measures announced by New Jersey on Tuesday, “underscore New Jersey's commitment to offshore wind energy and the bright future of the industry in the Garden State,” the report said.
“While we are advancing clean energy projects throughout the region, we look forward to continuing valuable partnerships with New Jersey stakeholders,” the statement said.
The company would not say whether it plans to propose future projects in New Jersey.
But Jeff Tittel, a longtime environmentalist and retired president of the New Jersey Sierra Club, called the settlement with Orsted “a sellout.”
“The governor said they would be held accountable for the entire $300 million they owe the state for their failed project,” he said. “They are being laid off and paying less than half, while New Jersey loses $175 million. This is a bad deal for New Jersey.”
The settlement announcement was one of several that Democratic Gov. Phil Murphy's administration made Tuesday regarding offshore wind energy.
The state said it is moving the next tender for additional offshore wind projects from the third quarter of 2026 to the second quarter of 2025. The current round of solicitations in New Jersey closes on July 10.
The state also said it is suspending plans to coordinate energy transmission scheduling for offshore wind projects with regional grid operator PJM Interconnection because of a new rule from federal energy regulators that could affect scheduling and costs.
“The development of offshore wind energy remains a unique opportunity that will result in significant economic and environmental benefits throughout the Garden State,” Murphy said in a statement. “At this critical inflection point for the industry, both in New Jersey and across the country, it is critical that we remain committed to delivering on the promise of thousands of family-sustaining, union jobs and cleaner air for generations to come.”
Orsted wrote down $4 billion last fall, largely due to costs related to the cancellation of its two projects in New Jersey. The company cited supply chain issues, inflation and the inability to get sufficient tax breaks from the government.
There are currently three tentatively approved offshore wind projects in New Jersey.
The state is home to vocal opposition to offshore wind energy by numerous groups that say the projects are too expensive and potentially harmful to the marine environment.
Protect Our Coast NJ said the move to accelerate offshore wind contracts “reflects the changing political landscape in Washington and New Jersey,” and called Murphy's clean energy goals “arbitrary and unrealistic.”
Advocates say they are an important way to move away from burning fossil fuels that contribute to climate change.
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