Danish energy developer Orsted said Tuesday night it is scrapping two large offshore wind power projects off the coast of New Jersey, adding uncertainty to a nascent industry the Biden administration and many state governments are counting on to help transition away from the burning of planet-warming fossil fuels.
The company said it is canceling its Ocean Wind I and II projects in southern New Jersey, citing supply chain issues and rising interest rates.
Orsted CEO Mads Nipper said in a statement the company was disappointed to be halting the projects because it believes the United States needs wind power to reduce carbon emissions.
“However, the significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision,” Nipper said.
Orsted stands to lose a $100 million guarantee it posted with New Jersey earlier this month that it would build Ocean Wind I by the end of 2025. That money could be returned to ratepayers.
The company said it would move forward with its Revolution Wind project in Connecticut and Rhode Island.
Orsted, the world’s largest wind energy developer, warned in August that it might walk away from one or both of its New Jersey projects, which it said needed more financial subsidies beyond a tax break approved by the state that would have let the company keep as much as $1 million in tax credits that otherwise would have had to be returned to electricity ratepayers.