OCEAN CITY – Just a month and a half after it issued an announcement that the Ocean Wind I project would be delayed until 2026, Ørsted A/S, the parent company of Ocean Wind I LLC, has put up a $100 million guarantee that the wind farm would be operational by December 2025.
The escrow guarantee was a requirement of legislation that allowed Ørsted to retain federal tax credits that it had earlier promised to return to New Jersey ratepayers.
The guarantee comes even though Ørsted has not repudiated its earlier notice of a two-year delay in the development of the 1,100-megawatt wind farm. The company has also not clarified its August remarks that it could decide by the end of this year or early next year to end its involvement in the project due to higher-than-expected costs and a failure to secure additional tax credits.
The posting of the guarantee was approved by unanimous vote of the New Jersey Board of Public Utilities at its Wednesday, Oct. 11, meeting. There was no discussion of the guarantee by board members during the public portion of the meeting, but the issue was on the agenda for the board’s closed session.
BPU staff and the Attorney General’s Division of Law certified to the board that the posting of the escrow met the requirement of the legislation. Ørsted stands to forfeit the funds if Ocean Wind I is not operational by the end of 2025. Staff discussion indicated that in the event of a forfeiture, the funds, at the board’s discretion, could be returned to ratepayers or used in other ways to further offshore wind goals.
In an Aug. 29 release, a month and a half after the July 6 legislation that allowed Ørsted to retain federal tax credits was signed into law, the company said that the Ocean Wind I wind farm would be delayed until 2026 at the earliest. The company also said its offshore wind portfolio of projects is expected to suffer financial impairment of over $2.5 billion.
With the New Jersey federal tax credits in hand, Ørsted argued that it needed more public funds or its wind farm projects may no longer be viable.
In a petition before the New York State Public Service Commission, Ørsted pointed to persistent supply chain challenges, high interest rates and higher-than-expected inflation as the causes of its expected losses.
The company went on to state that “continued discussions with senior federal stakeholders about additional [investment tax credit] qualifications for Ocean Wind I and Sunrise Wind are not progressing as we previously expected.”
Sunrise Wind, a 924-megawatt wind farm partnership between Ørsted and Eversource, is slated to be a little more than 30 miles east of Montauk in New York.
In an Aug. 28 letter a group of New York utilities argued against any further tax credits for wind farm developers, stating that the companies should be forced “to prepare robust bids that appropriately reflect the risks that apply to many development projects today.”
Ocean Wind I’s development schedule calls for commercial operation in stages by May 1, Sept. 1 and Dec. 1, 2024, with the wind farm fully operational by December 2025.
Contact the author, Vince Conti, at vconti@cmcherald.com.
