New Jersey Gov. Phil Murphy will accept a $125 million settlement from the offshore wind company that last year canceled two massive wind farms off the state’s coast, officials said Tuesday.
The deal ends a monthslong standoff between the Democratic governor and Denmark’s Ørsted over financial commitments tied to the canceled projects. The Garden State also said Tuesday it will pause its request for independent transmission projects for offshore wind in the wake of a federal rule that could sort out how to pay for beefing up regional power grids.
The announcements come as New Jersey and other East Coast states figure out how to support offshore wind after the industry’s financial struggles last year. New Jersey committed on Tuesday to holding its next solicitation for offshore wind projects in 2025 instead of 2026.
“Offshore wind development remains a once-in-a-generation opportunity,” Murphy said in a statement. “It’s critical that we remain committed to delivering on the promise of thousands of family-sustaining, union jobs and cleaner air for generations to come.”
Offshore wind is key to clean energy targets for President Joe Biden and coastal states like New Jersey, but the industry faced setbacks in 2023 due to high prices and an immature supply chain. Those troubles slowed down the build-out of offshore projects and culminated in the cancellation of Ørsted’s Ocean Wind 1 and 2 projects off the coast of New Jersey in October.
Murphy said at the time he would “fight like hell” over $300 million in investments Ørsted had committed to the state related to the canceled projects.
Under the settlement deal announced Tuesday, Ørsted will instead pay New Jersey $125 million, and both the wind company and the state will release any claims on the other related to the wind farms, the New Jersey Board of Public Utilities (NJBPU) said in a news release. The board is the central regulator over electricity in the state.
The settlement money will go to “investments in qualified wind energy facilities, investments in offshore wind component manufacturing facilities, and other clean energy programs,” the press release said.
The NJBPU also said it will pause its plan to solicit, for a second time, transmission projects to connect offshore wind to the onshore grid. The decision will give state regulators time to consider the Federal Energy Regulatory Commission’s recently announced grid rule, which orders grid operators to plan new power lines to support renewables and guard against extreme weather damage, the board said.
“Pausing at this time affords Board staff the opportunity to fully evaluate the implications of the new FERC rule and participate in [the grid operator’s] process to ensure the best outcome to meet New Jersey’s transmission needs at the least cost to ratepayers,” the utility board said in a news release.
Considered an ambitious approach to advancing the power grid into the ocean, the board’s first transmission solicitation in 2022 ended with a roughly $1 billion commitment to onshore upgrades to prepare for offshore wind projects.
Lastly, New Jersey regulators Tuesday said their fifth offshore wind solicitation will be moved up to 2025 to accelerate offshore wind growth. The state is taking bids on its fourth solicitation for up to 4 gigawatts in offshore wind projects. Its fifth solicitation had been scheduled for 2026.
“New Jersey’s economic and environmental future depends on the bold action we take today to secure billions of dollars in economic benefits and a significant reduction in emissions from the electric sector,” said NJBPU President Christine Guhl-Sadovy. “By accelerating New Jersey’s offshore wind development schedule, we underscore our commitment to realizing the industry’s full potential for the benefit of all New Jerseyans.”
