Orsted, a Danish wind energy corporation, has guaranteed to spend $100 million on an offshore wind farm in New Jersey, the state’s first.
Commercial operation is scheduled to begin on May 1, September 1, and December 1, 2024, respectively. However, the guaranteed money would be lost if the project is not completed by December 2025.
To comply with the conditions of the law passed by Governor Phil Murphy in July that allows Orsted to retain federal tax credits that it otherwise would have had to refund to New Jersey consumers, the company deposited the necessary funds into an escrow account on October 4.
The Democratic governor, who wants New Jersey to become the East Coast hub of the emerging offshore wind sector, argued that the tax incentive was necessary to achieve his goal. He said it would allow Orsted to finish the project despite the industry’s financial woes and its significant political resistance, particularly from Republican politicians and their allies.
According to a statement released by Orsted on Wednesday, the procedure of complying with the statutory requirements has been approved. However, it did not comment on when it expects to finish the first of two offshore wind projects it proposes to construct off the coast of New Jersey.
Orsted announced in August that the completion date had been pushed back to 2026 because of problems in the supply chain, rising interest rates, and an inability to get sufficient federal tax credits.
During a recent earnings conference call, business executives discussed the possibility of writing off $2.3 billion related to depreciated U.S. projects. It added that it pondered giving up on the Ocean Wind I project off the coast of southern New Jersey altogether but ultimately opted to press on.
Orsted North America filed an affidavit with the board last month promising to carry out the project if the guarantee was authorized.
Orsted’s Ocean Wind I project in New Jersey has been given federal permission, while the company’s second New Jersey wind farm project, Ocean Wind II, has been given state approval. Suppose Orsted does not secure government approvals to construct and manage the first plant. In that case, the parties to the deal reached on Wednesday will refund the $100 million to New Jersey utility ratepayers.