Orsted scraps Skipjack deals in latest US offshore wind reset

Danish offshore wind giant Orsted has retrenched further in the US by pulling out of an offtake agreement with the State of Maryland for its 966MW Skipjack arrays, three months after scrapping its Ocean Wind projects in New Jersey.

Orsted said it had, after consultations, decided to withdraw from the Maryland Public Service Commission orders that were tied to the previous approvals of Skipjack 1 and 2. The two projects are currently under development off the coast of the Delmarva Peninsula.

In its statement on the withdrawal, Orsted stressed that the company “remains committed to advancing the development and permitting processes for the combined Skipjack Wind project.

“This includes the submission of an updated Construction and Operations Plan to the Bureau of Ocean Energy Management (BOEM),” the company added.

Orsted said the decision followed a extensive review of the offtake terms, expressed in the existing Offshore Wind Renewable Energy Certificates (ORECs).

“The payment amounts for ORECs set forth in the orders are no longer commercially viable because of today’s challenging market conditions, including inflation, high interest rates and supply chain constraints,” the offshore wind developer stated.

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David Hardy, head of Orsted’s Americas business, stated: “Today’s announcement affirms our commitment to developing value creating projects and represents an opportunity to reposition Skipjack Wind, located in a strategically valuable federal lease area and with a state that’s highly supportive of offshore wind, for future offtake opportunities.

“As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available. We’ll continue to advance Skipjack Wind’s development milestones, including its construction and operations plan.”

Hardy expressed what he described as Orsted’s “continued support for the state’s leadership as they pursue their ambitious offshore wind goal.”

Critics say the developers are simply paying the price for over ambitious bidding strategies that resulted in a “race to the bottom” on pricing, and some question whether there will be the hoped-for scope for obtaining better deals in an election year where the cost of living will be under the microscope.

New Jersey’s leadership position in the US sector was shaken last year when Orsted withdrew 2.25GW of capacity in its Ocean Wind 1 & 2 projects after concluding it could no longer turn a profit

In its statement on the Skipjack decision, Orsted stressed that it “continues to advance, build, and invest into several US offshore wind projects.”

These include the under-development South Fork Wind project in New York which was described as “set to reach full operation in the weeks ahead”.

Construction has also started on Revolution Wind which will delivering power to Rhode Island and Connecticut.

Orsted also confirmed that the Sunrise Wind project was was re-submitted in the New York 4 solicitation on Monday. If awarded, Orsted said new terms “would improve the project’s financial position and advance the most mature offshore wind project in the state’s pipeline”.

Orsted stressed that its has additional uncontracted seabed along the US East Coast with which to continue with long-term growth ambitions.