FENWICK ISLAND — The news that Ørsted canceled its offshore wind projects off New Jersey’s coast has sent shockwaves throughout the renewable energy sector, and the Danish company is still considering the future of its planned wind farm off the coast of Maryland and Delaware.
Ørsted CEO Mads Nipper announced in late October it was scrapping Ocean Wind 1 and 2, which was slated to deliver 1,100 megawatts of wind energy, to New Jersey due to supply chain issues. Chief among those issues is the long delay in building the vessel that would install the wind turbines’ foundation. But Maddy Voyteck, Ørsted’s head of government affairs and market strategy for Maryland, also pointed to “unprecedented macroeconomic challenges in the form of high interest rates and rising inflation.”
“We anticipate having a better understanding of Skipjack Wind’s path forward in the coming months,” Voyteck told Delaware Business Times.
Ørsted has long planned a wind farm off the Maryland-Delaware coast since it acquired one of the two companies that successfully won rights for development back in 2018, and it had planned for several projects near New York, Connecticut and Rhode Island. Skipjack Wind, the Maryland project planned to generate energy to power 300,000 homes, would help Maryland meet its renewable energy goals but would most likely need to bring transmission cables to the electric grid in Delaware.
“Ørsted is continuing its comprehensive analysis of potential landfall locations and cable route options for Skipjack Wind. No decisions have been made at this time on potential landfall locations or cable routes,” Voyteck said. “We take seriously our responsibility to be a good neighbor and a steward of the environment and are committed to a dialogue with stakeholders in Delaware about the interconnection process before final decisions are made.”
Delaware has been late to the table in terms of tapping into offshore wind, as two previous studies in the last 15 years had suggested pricing would prove too expensive. Gov. John Carney, entering his final year, had signed a slate of green energy bills to push the First State to find more renewable options. Among those bills included Senate Bill 170 to study potential avenues for procuring offshore wind power.
Carney believes Delaware has set an ambitious but realistic energy goal, and there will be multiple sources needed to meet it, according to the governor’s office. There are multiple wind projects being planned along the coast which can potentially help Delaware meet its goals, including two projects from U.S. Wind that will grant Maryland the renewable energy credits.
But critics of offshore wind like Dave Stevenson, director of Caesar Rodney Institute’s Center for Energy and Environmental Policy, have long argued that the cost of wind farms is too high for taxpayers to pay. With Skipjack, the tax credits and power would be credited to Maryland while Delawareans would still see the turbines, as it would be 15 miles from Fenwick Island.
“With a 800 megawatt facility, if we were to provide the same deal with Maryland at $147 per megawatt hour, it would add between $400 to $500 a year for residential electric,” Stevenson said. “The jobs tied with these projects are still promised for Maryland workers. There’s not that many full-time jobs, and the facilities selected are in Ocean City, Md. They project thousands of construction jobs, but many components are made in Europe and a Baltimore plant.”
In 2019, the New Jersey Public Service Commission approved adding $1.46 per month to customers’ electric bills to pay for Ocean Wind 1 and 2. Earlier this year, the legislature narrowly approved granting an estimated $1 billion in federal tax credits to the company.
Still, delays in component manufacturers sent a chill throughout the green energy sector this summer. The next major sign for the industry as a whole was the delay of Charybdis, the vessel designed to carry up to eight wind turbine parts, depending on the size. The ship is also impacted by supply chain issues and is about 70% complete, according to reports from the New York Times and the Wall Street Journal. But ultimately, the main vessels to anchor foundations for the turbines to the ocean floor were delayed possibly to 2026 causing Ørsted to walk away from Ocean Wind 1 and 2 and write off $4 billion in losses.
Voyteck told the Delaware Business Times that to de-risk the installation scope of Ørsted’s other five projects, the company used its strong market position to secure backup vessels for two other projects currently under construction. In addition, Ørsted is amid construction of its first vessel to service wind turbines, Eco Edison, at a shipyard in Louisiana.
“The process of securing an installation vessel is complex and, in this case, commercially sensitive,” she added. “Given Skipjack Wind’s current development timeline, we do not expect the installation vessel supply chain to be a primary concern for the project’s development. We will continue to leverage our portfolio to enable the expansion of the U.S. vessel industry.”
Looking at the financial picture, Ørsted has looked to raise charging rates for the energy generated from the wind turbines elsewhere. In New York, public utility regulators denied Ørsted’s request to hike future rates by 27% to $139 in October — a move the company warned would put the New York project Sunrise Wind at risk.
Voyteck did not directly comment whether the company would be seeking a similar negotiation with Maryland regulators, but did say Ørsted was exploring all options to support the project’s development.
Still, the Biden administration signaled that it was still committed to wind energy to meet previously outlined clean energy goals. In mid-December, the U.S. Department of the Interior announced it would sell development rights to roughly 278,000 acres off the East Coast, including 101,443 acres off the coasts of Delaware and Maryland.
“While we do not comment on our bid strategy, we support states as they consider establishing or expanding offshore wind targets,” Voyteck said. “The collaboration from federal and local stakeholders to identify and deconflict these lease areas will be critical to those new areas’ success. We will evaluate all opportunities to continue building America’s offshore wind industry, advance clean energy, and help states meet their important renewable energy goals.”
Since Delaware had declined to move forward on wind energy as far back as 2008, it still remains to be seen what the state stands to lose if Skipjack fails. SB 170 also authorized a new study on the impact of transmission lines, which Ørsted planned to bring into the First State at Dagsboro. Business leaders have thought that wind farm development within miles of Delaware’s beaches could open up local and regional construction and maintenance jobs, as well as manufacturing components and possible marshaling ports.
Despite this, the governor’s office believes there is more federal, state and private investment, and public support for offshore wind than ever. While some proposed projects will come to fruition and some will not, the industry is coming and Delaware will benefit from it, according to the governor’s office.
