Danish wind farm developer Orsted will pay $125 million to the state of New Jersey to settle a lawsuit over the company’s halting construction of two offshore wind farms last year — just over a third of what the company was previously required to pay.
The state of New Jersey and Orsted Corp. have settled claims against each other arising from Orsted’s decision last October to retire two wind farms off the state’s south coast, the state’s Public Utilities Commission announced Tuesday.
The state said the $125 million it will receive will be used to support investments in wind farms, parts manufacturing facilities and other clean energy programs.
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Before the projects were canceled, Orsted had given a $100 million guarantee to build one of the projects, Ocean Wind 1, by the end of 2025. It also had commitments to pay another $200 million toward developing New Jersey’s offshore wind industry.
Orsted said it was walking away from $300 million worth of guarantees because it would not proceed further with the project, a week after it abandoned it last fall.
In a statement to The Associated Press, Orsted said it was “pleased” with the settlement, which it said represents the company’s entire financial obligation to the state.
The agreement, along with other moves announced by New Jersey on Tuesday, “underscore New Jersey’s commitment to offshore wind and the industry’s bright future in the Garden State,” the company said.
“We look forward to continuing our valued partnership with New Jersey stakeholders while advancing clean energy projects throughout the region,” the statement read.
Onshore wind turbines spin on Nov. 3, 2023 in Atlantic City, New Jersey. (AP Photo/Wayne Parry)
The company declined to say whether it plans to propose future projects in New Jersey.
But Jeff Tittel, a longtime environmental activist and former president of the Sierra Club of New Jersey, called the Orsted settlement a “betrayal.”
“The governor said they would foot the bill for the full $300 million they owe the state for the failed project,” he said. “They ducked the responsibility and paid less than half, costing New Jersey $175 million. This is a bad deal for the state of New Jersey.”
The settlement announcement was one of a number made by Democratic Gov. Phil Murphy’s administration on Tuesday regarding offshore wind.
The state announced it would accelerate its next call for applications for additional offshore wind projects from the third quarter of 2026 to the second quarter of 2025. New Jersey’s current call closes on July 10.
The state also announced it was pausing plans to coordinate transmission plans for offshore wind projects with regional transmission operator PJM Interconnection because of new rules from federal energy regulators that could affect planning and costs.
“Offshore wind development is a once-in-a-generation opportunity that will deliver tremendous economic and environmental benefits across New Jersey,” Murphy said in a statement. “At this critical inflection point for our industry in New Jersey and across the nation, 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 posted a $4 billion loss last fall, mainly due to costs associated with canceling two projects in New Jersey. The company cited supply chain problems, inflation and not receiving enough government tax credits as reasons.
There are currently three pre-approved offshore wind projects in New Jersey.
Many groups in the state have vocally opposed offshore wind projects, arguing they are too expensive and could harm the marine environment.
New Jersey Protect Our Coast said the move to speed up offshore wind contracts “reflects the changing political climate in Washington and New Jersey” and called Murphy’s clean energy goals “arbitrary and unrealistic.”
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Supporters say it’s a key way to move away from burning fossil fuels, which contribute to climate change.
