Energy company Orsted is pausing “all development spend” on an offshore wind project in Maryland and may cancel the project entirely. The hiatus was announced by the Danish company’s CEO last month — on the same day Orsted also said it was ceasing development on two offshore wind projects in New Jersey.
Officials in both states were taken by surprise, including New Jersey’s governor, who publicly lambasted Orsted.
Orsted’s offshore wind project in Maryland, called Skipjack, has been in development since 2017, according to its website. The farm was supposed to generate 966 megawatts of clean energy, enough to power about 300,000 homes. The company also developed a site at Tradepoint Atlantic — a large industrial complex in Baltimore County that also houses distribution warehouses for companies like Amazon and FedEx — to support the now discontinued New Jersey offshore wind projects.
It’s unclear what work is still happening at Orsted’s Baltimore County facility. In an emailed statement, an Orsted official said the company is “assessing each scope of work connected to” its New Jersey projects.
Baltimore County Executive Johnny Olszewski Jr. said the slowdown of any project is “disappointing,” but that he remains optimistic about other projects at Tradepoint Atlantic, like U.S. Wind’s Sparrows Point Steel facility.
That project will “ensure Tradepoint Atlantic continues its ongoing transformation into a national offshore wind logistics and manufacturing hub — further fueling the remarkable turnaround for this storied site,” Olszewski said in an emailed statement.
It’s a tumultuous situation for what has been lauded as a promising industry in Maryland. Gov. Wes Moore set ambitious goals for the state to generate enough electricity from offshore wind to power 3 million homes as the state moves toward 100% clean energy by 2035. The governor has also said offshore wind partnerships could create nearly 15,000 jobs in Maryland.
Over the summer, Moore said he believes Maryland “will lead the country in offshore wind energy production.”
Moore’s office didn’t return a request for comment before publication.
The challenges facing Orsted’s projects reflect the headwinds the entire offshore wind industry is facing (pun unavoidable, sorry). Supply chain issues and high interest rates, for example, have made it more expensive and more logistically challenging to construct offshore wind farms. Orsted’s slowdown is a setback for the state’s clean energy goals, but doesn’t mean offshore wind is dead in Maryland.
U.S. Wind is confident its offshore wind project, MarWin, will be generating electricity for Marylanders within a few years. According to the company, MarWin will support more than 1,300 jobs in Maryland.
CEO Jeff Grybowski said he thinks onshore construction work on the energy project will begin in 2025. But, he said, it’s unlikely that any of the offshore work will kick off by then.
“I am pretty confident that MarWin will be Maryland’s first offshore wind farm. I can predict the beginning stages of that construction, but I can’t predict when it will be done,” he said.
Skipjack wind farm faces uncertain future
Orsted has been developing Skipjack for several years. The offshore wind project is expected to have nine turbines located about 21 miles off the Atlantic Coast.
But the company hasn’t submitted a construction or operation plan for the project yet, an official with the Maryland Energy Administration said. The assumption, the official said, is that Orsted’s Skipjack project should be as far along as U.S. Wind’s project — but it’s not.
And now it could be further stalled or delayed. During an earnings call, Orsted CEO Mads Nipper said the company is reconfiguring the project, “where all development work is paused to ensure minimum spend, and no additional capital commitments.”
Orsted could decide to cancel the project or “pursue alternative commercial solutions” if it does not receive “significant” adjustments to the Offshore Wind Renewable Energy Credits (ORECs) it received from the state, Nipper added. Renewable energy providers are awarded a set number of credits per year at a certain price that utility companies in Maryland are required to buy to meet the state’s green energy goals.
Put simply, if Orsted is not able to renegotiate the terms of the Skipjack deal to get more money from the state, ratepayers or other sources, it could decide to cancel the project.
In an emailed statement, Maddy Voytek, who oversees government affairs and market strategy in Maryland for Orsted, said the company “continues to develop Skipjack Wind and expects to have more clarity on its path forward as we continue discussions with stakeholders in Maryland and Delaware.”
Where U.S. Wind’s MarWin wind farm stands
MarWin will be located within an 80,000-acre lease area off the coast of Maryland. According to U.S. Wind officials, it will have 22 turbines or fewer more than 20 miles off the coast of Ocean City. It’s expected to generate about 300 MW of electricity, enough to power more than 92,000 homes in Maryland.
Initial plans called for the wind farm to begin generating electricity by 2025, but Grybowski said that’s likely when construction on the project will begin instead. Part of the delay is due to larger forces outside of the company’s control, he said.
The offshore wind industry in the United States “is in a phase of uncertainty,” he said.
“The supply chain is where the rubber hits the road,” he said. “We need to secure our vessels and equipment, the uncertainty of the market in the U.S. is making securing those things more challenging than it would have been a few years ago.”
In the meantime, U.S. Wind is continuing with the permitting process for the project. Grybowski said he thinks that fall 2024 is when the company could get final approval from the federal government for the project. The Bureau of Ocean Energy Management and U.S. Wind held multiple input meetings after the agency made available a draft Environmental Impact Statement.
The public comment period on the draft statement ended in late November. The company, Grybowski said, is now waiting for its final impact statement.
U.S Wind is also working on building its space at Tradepoint Atlantic. It will include manufacturing for parts of the wind turbines (but not the gigantic blades) and serve as a staging area for the offshore construction, U.S. Wind officials said.
Aaron Tomarchio, Tradepoint Atlantic’s executive vice president of corporate affairs, said the site is a diverse campus with lots of activity.
“We have a dynamic and robust industrial and logistics commercial sector here. We want offshore wind to be a part of that, especially for manufacturing, to be here in Maryland,” he said.
Even though Skipjack’s future is murky and MarWin’s is delayed, Tomarchio is optimistic about the industry.
“Are we disappointed that this project [Orsted] didn’t go forward? Yeah, of course we are. Do we think there is a future still for offshore wind? Yes,” said Tomarchio. “Do we think it’s going to be as big as we all thought it would be? Not at first, growth in the industry will take time.”
