New Jersey was ground zero for offshore wind’s woes in 2023. Now, it’s a testing ground for the industry’s recovery.
New Jersey utility regulators awarded contracts Wednesday to a pair of the largest offshore wind projects ever planned in the United States. The two projects combined would generate enough power to supply 1.8 million homes and deliver an emissions cut equivalent to removing nearly 1.3 million cars from the road.
The decision by the New Jersey Board of Public Utilities came on the heels of a Danish developer’s move last year to cancel two projects slated to serve the state. The cancellation dealt a major blow to Democratic Gov. Phil Murphy’s climate and clean energy goals and raised serious questions about the future of offshore wind in the United States.
But in awarding offshore renewable energy credits to Leading Light Wind and Attentive Energy Two, state officials said last year’s setbacks were only temporary.
“It is the clearest sign of the long-term commitment from the state of New Jersey and Gov. Murphy, and the beginning of the bounce back after a pretty crummy 2023,” said Tim Sullivan, chief executive officer of the New Jersey Economic Development Authority.
Leading Light Wind would be a 2.4-gigawatt project built more than 40 miles off the New Jersey coast. It is the second-largest offshore wind farm proposed in the United States after a 2.6-GW development off Virginia that’s slated to begin construction later this year. Leading Light is a joint venture of clean energy developers Invenergy and energyRe. The pair are the first American-based developers to win a competitive contract for an offshore wind farm in the United States.
“We sort of ceded this offshore business to foreign companies” because Europe got a head start, Invenergy CEO Michael Polsky said in an interview. But he said U.S. efforts were important for American know-how and “the ability to do things.”
He said the company’s experience developing everything from onshore wind and transmission projects to a natural gas plant supplied by liquified natural gas in El Salvador would aid Invenergy in its first offshore wind venture.
“We know how to deal with new challenges,” Polsky said.
Leading Light will fully develop the 76,000-acre lease it purchased in a federal auction for $645 million. The move contrasts with other companies, which have moved to develop their federal leases in stages. But a full build-out provides the developers with more certainty and an opportunity to achieve greater economies of scale, creating efficiencies and driving down costs.
“We thought that it would be an advantage for us to fill the size right away rather than, you know, do half now and then [face] uncertainty [about] when we’re gonna sell another half,” Polsky said.
Attentive Energy Two would be a 1.3-GW project 47 miles off the New Jersey coast. The effort is a joint venture of TotalEnergies, the French oil giant; Rise Light & Power; and Corio Generation. The New Jersey deal represents the second state contract the team has won in the last several months. New York awarded a contract to the developer to build a 1.4-GW project in late October.
“The Attentive Energy Two project is a community-driven project committed to building strong partnerships, strengthening the local supply chain, and developing a skilled workforce,” Attentive Energy Managing Director Damian Bednarz said in a statement. “We look forward to delivering this project with wide-reaching opportunity and impact for New Jerseyans across the State and continuing our community conversations to shape a cleaner and more equitable energy future.”
Wednesday’s announcement represents a boost to Murphy’s clean energy plans. The governor has set a target of building 11 GW of offshore wind by 2040, making the industry a key part of his push to achieve 100 percent carbon-free electricity by 2035. BPU officials estimated the two projects would cut carbon dioxide emissions by 6.4 million tons annually. By comparison, total emissions from New Jersey power plants were 15.7 million tons in 2022, according to EPA figures.
BPU’s announcement puts Murphy closer to his goal. Atlantic Shores, a 1.5-GW project planned almost 9 miles off Atlantic City, is already under development, having received a contract from the state in 2020.
But the state would be closer to Murphy’s goals had Ørsted not canceled its plans to build two projects with a combined capacity of 2.2 GW last year. The project was sunk by a combination of rising interest rates and snarled supply chains.
Ørsted made the decision to pull the plug after it encountered delays in securing a vessel needed to build the project. The decision created an uproar in Trenton, the state capital, where lawmakers had passed legislation designed to make it easier for the developer to utilize federal clean energy tax credits.
The contracts approved by the BPU include provisions intended to prevent future cancellations. That includes an inflation adjustment, which can rise or fall by as much as 15 percent depending on construction or financing costs. It also includes performance bonds intended to ensure the project’s completion. Attentive will be required to post a $67 million performance security while Leading Light must post a $120 million security.
The wind contracts would increase residential electric rates by $6.84 a month. Commercial rates would rise $58.73 a month, while industrial customers would see their bill rise $513.22 a month, according to commission estimates.
In a hearing, BPU commissioners framed the projects as a key tool in the fight against climate change, even as they pledged watchful oversight of the developments.
“Today’s actions are about the future, and the contributions we make to our children and grandchildren. The cost of inaction is incalculable. The benefits are real,” said Commissioner Zenon Christodoulou.
But he warned developers against seeking more money from consumers in the future, saying, “there will be no hat-in-hand requests, no unforeseen expenses, no nickel-and-diming the New Jersey ratepayers.”
One consequential provision of Wednesday’s contracts is the developers’ pledge to buy monopiles — as turbine foundations are known — from a factory in southern New Jersey. The pair also agreed to provide $164 million to fund an expansion of EEW America’s monopile factory in Paulsboro, New Jersey.
The factory is a key cog in the expansion of the U.S. offshore wind industry, but it faced an uncertain future in the wake of Ørsted’s decision to cancel its New Jersey projects. The Danish developer was an investor in the factory and had planned to help fund its upgrade into a full fledged manufacturing facility.
The fate of the facility has important implications for the U.S. offshore wind industry. Manufacturing monopiles and turbine towers domestically is widely viewed as critical to driving down the cost of offshore wind. Both components are made in Europe and shipped across the Atlantic Ocean.
It also would make it easier for developers to qualify for a 10 percent tax credit available to clean energy developers that use domestically made components under the Inflation Reduction Act. To receive the credit, developers must source all structural steel and iron from the United States.
The state still has to resolve outstanding issues with Ørsted over the facility’s finances, said Sullivan, the New Jersey Economic Development Authority CEO. But, he said, “we certainly feel more optimistic today than we did a couple days ago. The commitments from these developers are really important to getting EEW back on its feet.”
Reaction to the BPU decision was mixed. Offshore wind has emerged as a contentious political issue in New Jersey. Environmentalists praised the board, saying it puts the state on track to meet its climate commitments.
“The crucial highlight here is that the pullout of one project in a new industry is not going to dismantle the industry for the state of New Jersey,” said Eric Miller, New Jersey director of energy policy for the Natural Resources Defense Council. “What New Jersey has done today has shown they are in this for the long haul.”
Yet opposition to offshore wind in the state has mounted recently.
Some residents in coastal communities in southern New Jersey have objected to the prospect of looking at projects like Atlantic Shores, which would be built less than 9 miles off the state coast. Fishermen fear turbines could destroy their fishing grounds. They have been supported by Republican lawmakers and conservative interest groups, which object to the project’s costs. Many opponents have made unsubstantiated claims that wind development is responsible for a spate of humpback whale deaths.
Rep. Jeff Van Drew, a Republican, lambasted the decision on X, writing, “The Murphy admin has once again ignored the will of the people in order to line the pockets of offshore wind companies at the cost of NJ ratepayers.”
Robin Shaffer, president of the anti-wind group Protect Our Coast New Jersey, said the decision “shows a willful ignorance of public sentiment as well as a bias in favor of an industry that is literally collapsing economically.”
But other opponents welcomed the decision to move turbines further offshore. One major concern of Save Long Beach Island, another anti-wind group, was the decision to site projects such as Atlantic Shores and Ocean Wind so close to land, said Bob Stern, the group’s president.
“It looks like they’re focusing on areas further offshore. That’s good. That’s something we advocated for a long time,” Stern said.
Atlantic Shores, by contrast, “looks like a stick in the mud,” he added. “I don’t think changing that or removing that project will hurt the governor’s efforts to have a good program.”