Ørsted has canceled its Skipjack Wind agreement with Maryland but will continue preparations to build the 966-MW offshore wind farm in hopes of securing a better deal.
In its announcement Jan. 25, the company cited the same factors that have caused so much pain for the U.S. offshore sector since late 2022: inflation, interest rates and supply chain constraints.
Ørsted said the offshore renewable energy credit (OREC) price that it previously negotiated with Maryland is too low now to be commercially viable.
Even as a global leader in the offshore wind industry, the Danish firm has been hit hard by the sector’s growing pains in the United States, reporting billions of dollars in cost impairments on project delays and cost escalation.
Other developers have canceled OREC contracts and power purchase agreements along the Northeast U.S. coast in the past year, but none went as far as Ørsted did in October, when it outright canceled the 2.24-GW Ocean Wind 1 and 2 projects off the New Jersey coast.
But Ørsted is moving forward elsewhere.
It and Eversource are nearing completion of South Fork Wind and preparing to start construction of Revolution Wind.
In New York last week, the partners canceled their OREC contract for Sunrise Wind and promptly re-bid the project into the latest solicitation, presumably at significantly higher cost — which essentially is what Ørsted wants to do with Skipjack.
The company said as it looks for that opportunity it will continue to move Skipjack through the development and permitting process and submit an updated construction and operations plan to the U.S. Bureau of Ocean Energy Management.
“As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available,” Ørsted Americas CEO David Hardy said in a news release. “We’ll continue to advance Skipjack Wind’s development milestones, including its construction and operations plan.”
Skipjack would stand off the Delaware coast, but it would feed into the Maryland grid. It has been part of Maryland’s emissions-reduction strategy and would equal 11% of the state’s 8.5-GW 2031 offshore wind target.
Democratic Gov. Wes Moore’s office summed up the situation in a prepared statement:
“Governor Moore is disappointed by the news of Ørsted’s repositioning of the Skipjack Wind project, an effort that has the capacity to impact the lives of so many Marylanders. However, he will continue to work with legislators, Maryland’s federal partners, offshore wind developers and advocates that see Maryland’s potential in order to build a system to help Maryland reach the state’s goal of 100% clean energy by 2035.”
Maryland Public Service Commission Chair Frederick Hoover offered a similar response Friday: “Yesterday’s news from Ørsted is disappointing — the Skipjack project was an important component in advancing Maryland’s clean energy goals. However, the Commission remains optimistic about the future of the offshore wind industry in Maryland, and would note that the US Wind project continues to move through the federal approval process.”
Maryland awarded ORECs to US Wind for its MarWin and Momentum Wind projects, which total approximately 1,100 MW and are progressing through federal review. (See Draft Environmental Statement Prepared for Maryland OSW.) Additional portions of US Wind’s lease area off the Delaware/Maryland coast are designated for potential future development.
There are some constraints on offshore wind development near the DelMarVa peninsula, however, due to extensive military and space launch activity in the region. (See BOEM to Auction Wind Energy Areas in Central Atlantic.)
