Ørsted Is Not the Last Word on Offshore Wind

By Anjuli Ramos-Busot, Director, NJ Chapter of the Sierra Club

On October 31 (Happy Halloween!), Ørsted announced that it would officially cease the development of the offshore wind turbine projects Ocean Wind I and II in New Jersey. The turbines would have been of significant value in helping New Jersey meet its emissions reduction goals to slow climate warming. Gov. Phil Murphy has called into question the company’s “credibility and competence.”

This news is extremely disappointing after numerous statements from the company that the projects would continue as planned, despite delays seen in recent months. Unfortunately, this came down to inflation, unstable market conditions, and bad timing.

The current challenges around offshore wind project prices are a temporary reflection of power purchase agreements that were signed before the pandemic, when high supply chain costs and interest rates were unforeseen. The cost of iron and steel rose 149% between 2020 (when Ørsted issued their bid) and early 2022. Prices have fallen since then but in early November were still 81% above the 2020 low, according to the US Producer Price Index.

These cost burdens cannot be put on the New Jersey ratepayer, and we must continue to work toward cost-effective solutions to kickstart this new industry and fully take advantage of federal funding available for clean energy projects. 

Taxpayers did not end up paying for Ocean Wind 1 and 2. Tax credit legislation signed in July permitted federal credits to benefit Ocean Wind 1 if and only if Orsted builds the project. Ørsted did not receive anything. Instead, Ørsted will have to refund New Jersey over $300 million.

The NJ Chapter of the Sierra Club will continue to push for solutions and the responsible development of offshore wind in our state, as it is one of our strongest climate solutions and has the potential to generate thousands of clean jobs and power our communities. Recently, our Chapter signed a joint statement with 40-plus environmental organizations who remain steadfast in support of offshore wind.

Let’s be clear: Clean energy advocates are not defeated by this outcome, as it has little to do with opposition groups in New Jersey or the fossil fuel industry. This setback is mostly financial. New Jersey needs this green industry, and we cannot let this disappointing economic delay deter our collective movement for a better and safer New Jersey for all of us and future generations. 

New Jersey’s opportunity to take advantage of this powerful renewable energy source does not stop here. The beginning of an industry will inevitably face hurdles especially in an environment of inflation and supply chain bottlenecks, but New Jersey will move forward.

Responsibly developed offshore wind can be developed—our neighbors have done it with Vineyard Wind, in Massachusetts, and South Fork, off Long Island. We are eager for an expedited third round of solicitations for wind development applications and see Ørsted as just a setback in our timeline, not an end to our goals of cleaner air, family-sustaining jobs, and a transition away from fossil fuels.

This fight is not over, and we need to build our movement even stronger to ensure that the clean energy transition moves forward. We will fight and continue to fight to make sure we will have a safer climate future.


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