Offshore Wind Firm Cancels New Jersey Projects, As Industry's Prospects Dim

Orsted, a Danish offshore wind company, canceled its plans to build two wind farms off the coast of New Jersey -- "a blow to the state's efforts to cut greenhouse gas emissions and the latest shakeout in the U.S. wind industry," reports the New York Times. From the report: The move, which will force Orsted, a Danish company, to write off as much as $5.6 billion, will crimp the Biden administration's plans to make the wind industry a critical component of plans to reduce greenhouse gas emissions. High inflation and soaring interest rates are making planned projects that looked like winners several years ago no longer profitable. "The world has in many ways, from a macroeconomic and industry point of view, turned upside down," Mads Nipper, Orsted's chief executive, said on a call with reporters on Wednesday. The two projects, known as Ocean Wind 1 and 2, were destined to provide green energy to New Jersey. They were strongly backed by the state's governor, Phil Murphy, a Democrat with national ambitions who stresses his environmental credentials but who has lately drawn scorn for falling short in combating climate change. On Wednesday he suggested that Orsted was a dishonest broker and insisted that the "future of offshore wind" along the state's 130-mile coastline remained strong. Mr. Nipper said Orsted thought that losses on the New Jersey projects would rise over time, so "the only sensible thing is to draw a line in the sand." Offshore wind and other parts of the renewable industry have hit some snags in Europe, especially in Britain. But Mr. Nipper said the problems were more acute in the United States because early contracts lacked protection from inflation and developers incurred high costs because of delays in approvals during the Trump administration. The company's stock price fell nearly 26 percent on Wednesday after it reported a loss of about $3.2 billion for the third quarter and warned that the write-downs -- essentially a reduction in the value of the company's investments -- would affect Orsted's finances. Orsted is writing off 28.4 billion krone, or about $4 billion, now. The company estimates that it may take another charge of up to 11 billion krone later in the year. The report notes that Orsted still plans to move forward with a $4 billion project called Revolution Wind intended to supply power to consumers in Rhode Island. Other projects are under construction, too, "like Vineyard Wind, which will eventually have 62 turbines in the waters off Martha's Vineyard, Mass."

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