The Ocean Wind 1 offshore wind farm has received approval from the Biden Administration, making it the third project approved in U.S. waters.
Ocean Wind 1 is a large offshore wind farm proposal situated around 13 nautical miles off the coast of Middle Township, towards the state’s southernmost tip.
At full buildout, it will have a limit of 2.2 GW, making it the biggest seaward wind ranch in the US and the biggest maker of wind power (coastal or off) in New Jersey.
Until January, it was a joint venture between Orsted and PSEG, a utility company in New Jersey. After PSEG sold its 25% stake, Orsted became the sole owner of the development. PSEG mentioned an “optimized tax structure” for the project’s partners.
The construction and operations plan (COP) for Ocean Wind has been approved by the Bureau of Ocean Energy Management (BOEM), clearing the way for buildout.
“Ocean Wind 1 represents another significant step forward for the offshore wind industry in the United States,” said BOEM Chief Elizabeth Klein. “The project’s approval demonstrates the federal government’s commitment to developing clean energy and fighting climate change and is a testament to the State of New Jersey’s leadership.”
Because the initial steel monopile foundation for Ocean Wind 1 was built before the White House’s announcement, Orsted may have been confident that it would receive approval from the federal government. Turbine structure manufacturer EEW conveyed the first 98 monopiles for Sea Wind at its Paulsboro, New Jersey factory on July 3, two days before the White House officially approved the venture.
Ocean Wind 1 is the third project that has received full approval for construction in federal waters. Vineyard Wind and South Fork Wind, the first two, are already under construction. The administration’s midterm goal of 30 GW of offshore wind capacity by 2030 is only a small step forward with these projects.
However, the assumptions that underpin that goal are being called into question in light of the shifting market environment. The outlook for development plans made before the pandemic is being impacted by supply chain cost increases that wind developers on both sides of the Atlantic deal with.
Power purchase agreements (PPAs), which are state-regulated contracts that regulate the sale price of their electricity output, have been called for renegotiation or termination by developers of some of the largest offshore wind projects in the United States in recent months.
The developers argue that because these PPAs were negotiated in a different era, they do not offer a profit margin in the current environment.
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According to the joint venture SouthCoast Wind, which is owned by Shell, Engie, and EDP, the terms of its PPA are “not economic, in light of significant inflation, supply chain, and financing cost increases,” according to a request made to the state of Maryland.
“Rampant inflation, global supply chain disruptions and soaring interest rates” are the reasons given by the BP/Equinor joint venture Empire Wind, located on the approach to New York Harbor.
