In the long-running sibling rivalry between New Jersey and New York, the Garden State finally thought it had the upper hand.
The state’s Democratic governor, Phil Murphy, came to the conclusion that offshore wind might make it one of the greenest in the country. Two of New Jersey’s three planned offshore wind projects were cancelled by developer rsted, putting an end to Murphy’s ambitious plans to decarbonize the state’s power supply by 2035.
Now, if President Joe Biden ever intends to fulfil his energy targets for the nation, New York and other Northeastern states are going to have to pick up New Jersey’s slack. New York, the older and more successful brother, stands ready to steal the factories and jobs that New Jersey had planned to attract.
New York Offshore Wind Alliance Director Fred Zalcman: “We’re certainly the state with the greatest ambition at this point.”
The success of offshore wind is also crucial to the state of New York. After the New Jersey projects vanished, it became even more urgent to make new attempts to salvage or replace the at-risk projects the state had already approved.
Coastal states with a lot of people have long looked to offshore wind as a way to accomplish their climate goals. Wind farms can generate electricity for coastal cities without having to compete with residents for space.
Democratic leaders who sought to develop maritime ports, build new factories, and create union jobs found that approving new wind farms became a sometimes competitive cause célèbre. Even though they use the same oceanic waters, it turned into a zero-sum game.
Greenest Head of State
During his campaign, Murphy pledged to phase out the usage of coal and natural gas in the state, earning him acclaim from environmental groups as the “greenest governor” in the country. Neither his national competitor for greenest governor, California’s Gavin Newsom, nor his northern neighbour, New York’s Kathy Hochul, were as ambitious as he was.
The Murphy administration granted the largest offshore wind project in American history to the Danish developer rsted in 2019. The governor at the time said that this agreement will “revolutionise the offshore wind industry here in New Jersey and along the entire East coast.”
In 2021, the state approved two further projects, both of which were the largest of their sort at the time. These were rsted’s second and third projects, respectively. Reiterating his previous statement, Murphy praised New Jersey for continuing to be a “leader in the offshore wind industry in the United States.”
But just two years later, the industry is struggling before it can realise those lofty goals, with a growing number of cancelled projects like the one in New Jersey and others on the verge of collapse.
More than 17 gigawatts of offshore wind projects were contracted in Maryland, Virginia, Massachusetts, Rhode Island, Connecticut, New York, and New Jersey earlier this year, providing enough energy to power more than 5 million homes. Almost two-thirds of that has been scrapped or is in jeopardy.
For New Jersey, the collapse of the deal made with Ørsted means Murphy’s ambitious goal of making New Jersey’s grid carbon-free by 2035 is most likely out of reach, while the governor said he still wants the state to be a global leader in offshore wind. Two 1,110 MW projects were proposed for the Garden State by rsted, which would have been enough to supply electricity to one million homes.
This is a major setback for the area as a whole.
New Jersey project cancellations are “unfortunate,” according to Chris Kearns, acting commissioner of Rhode Island’s Office of Energy Resources.
“These projects and the components that go into them are of significant scale, so it requires a regional economic development kind of hub for this activity,” he said. “So we need projects being built up and down the Northeast.”
There was a resetting of the states.
The challenges faced by several of the region’s initial offshore wind projects are a major factor in rsted’s choice in New Jersey. Companies made promises to construct the projects at a cost they are unable to pay because to inflation and supply chain challenges they attribute to the global pandemic and the conflict in Ukraine. However, political backing for the projects has dwindled as a result of vocal and well-resourced resistance from beachfront homeowners.
The energy industry has been making the rounds in the western states, looking for more funding.
Officials in New York, where rsted also has projects, turned down the company’s desire to renegotiate contracts and the requests of other renewable developers who were looking to increase their rates.
At first, the rejection appeared like a disaster for offshore wind, but Hochul quickly stepped in to reassure the industry, and within days, the state signed fresh contracts with other companies for new projects that would generate enough electricity to power three million homes. New York’s energy authority also invited developers for advice on a new round of bids for offshore wind that might be issued before the end of the year. Some of the threatened projects may be saved, and the state may be able to move closer to its clean energy objectives.
New Jersey Governor Phil Murphy and Democratic state legislators gave it to rsted the way they wanted it after pushing through legislation to increase the firm’s profits, but it wasn’t enough.
New Jersey isn’t as eager as New York to give the green light to new construction. Even more uncertainty is introduced by the fact that Republicans typically oppose offshore wind and parliamentary elections this month could wipe out Democratic majorities in both chambers.
Atlantic Shores, the lone remaining approved wind farm in New Jersey, and EEW, a German business that established itself in South Jersey in part to supply rsted and other corporations with important infrastructure for wind farms, are under significant pressure at the present time.
Both businesses are currently in discussions with state authorities.
The offshore wind business may have taken a hit in New Jersey, but authorities there and in other East Coast states say they are optimistic about its long-term prospects. A number of government representatives have cited offshore wind as the most significant renewable power option.
States are also starting to cooperate together in the face of the industry’s issues. Three New England states, Connecticut, Massachusetts, and Rhode Island, have joined forces to fund regional initiatives.
Larger projects should result in cheaper costs for each state.
“We’re navigating these challenges in the offshore wind industry very carefully to ensure that we can secure these clean energy resources at prices that are competitive and that are affordable for our ratepayers,” said Katie Dykes, the commissioner of Connecticut’s Department of Energy & Environmental Protection.
rsted also brought good news, deciding to construct the Revolution Wind project that will provide service to Rhode Island and Connecticut.
New York’s Long Island publicly-owned utility is building South Fork Wind, and parts are being sent from a port in Connecticut for eventual installation in New York. The Massachusetts portion of Vineyard Wind I is also making progress.
The financial difficulties of rsted have impacted Maryland. The firm has requested the state’s utility regulator to let the corporation keep more of its federal tax incentives.
Paul Pinsky, director of the Maryland Energy Administration, said, “We would like to avoid the interruptions witnessed in the Atlantic coastal states, but we also want to remain vigilant of any additional costs shoulder by rate-payers.”
New York now has the biggest quantity of contracted offshore wind power, and General Electric has pledged to develop factories to produce turbine blades and nacelles, which convert mechanical energy into electrical current. Energy companies have committed to purchasing GE components, and the state is investing $300 million to make the factories financially feasible.
New Jersey’s “wind port,” a showcase of Murphy’s offshore wind plans, was once under consideration as a potential location for a GE factory. However, that did not occur. Ports in New Jersey have been prepared for offshore wind at a cost of hundreds of millions of dollars. The state’s Republican party is now demanding an audit of these funds.
States have been competing to secure the U.S. supply chain for the new industry, connecting in-state investments to bid assessments and offering subsidies for port and other facilities.
However, New York’s wind alliance director Zalcman predicted that would begin to alter after cancellations were made in New Jersey.
“It’s more of a clarion call for the region to work together and for states not to try to go it alone,” he said. All of us are dependent on the supply chain developing smoothly.
The escalating prices and uncertainty in the business have not deterred environmental activists and others who support it. Once operational, offshore wind would reduce exposure to oil and gas market fluctuations, so the argument goes.
Despite Democrats in the Northeast’s best efforts to obtain wind projects, the largest offshore wind project currently in development is located in Republican-governed Virginia.