Shell-EDF New Jersey wind plan gets US environmental green light
BOEM nod advances some 3GW of capacity towards full approval, but low offtake price raises questions over viability
US offshore energy regulator Bureau of Ocean Energy Management (BOEM) announced Thursday its final Environmental Impact Statement (EIS) for two offshore wind energy projects under development by Shell-EDF’s Atlantic Shores joint venture in waters facing New Jersey holding some 3GW of total capacity.
The two projects located some 8.7 miles (14 km) off New Jersey are collectively referred to as the Atlantic Shores South, but only the 1.5GW Atlantic Shores 1 project has an offtake contract with the state.
The combined construction and operations plan includes up to 200 total wind turbines and possibly ten offshore substations with export cables making landfall in Atlantic City and coastal community of Sea Girt 70 miles north.
“Completing this environmental analysis is a significant milestone in [President Joe Biden's] administration's drive to realise clean energy ambitions,” said BOEM director Elizabeth Klein.
“We are encouraged to see forward progress and getting another step closer to delivering New Jersey's first offshore wind projects, " said Joris Veldhoven, Atlantic Shores CEO.
Sam Salustro, vice president of strategic communications at industry advocate Oceantic Network, said: “The US offshore wind market is moving forward with momentum, today bringing yet another project to the cusp of final construction approval.
“BOEM's consistent actions are building durability for the industry and opportunity for America,” he added.
The project is expected to be issued its record of decision by BOEM soon, bringing the total capacity of approved US projects to 12GW.
Former president and current candidate Donald Trump, however, targeted the developers in remarks at a recent rally in the coastal community of Wildwood, where he said: “You won't have to worry about governor Murphy's 157 windmills,” adding, “we are going to make sure that that ends on day one.”
New Jersey governor Phil Murphy is a champion for offshore wind, raising the state goal to 11GW by 2040. The number of turbines Trump mentioned actually references a separate Atlantic Shores project, however.
Troubled state waters
The federal move belies troubles in state waters as projects struggle with offtake contracts awarded prior to surging inflation and interest rates that shot costs skyward by some 30% over the past two years.
Atlantic Shores 1 was awarded in New Jersey’s round 2 solicitation in 2021 for an estimated levelised price of $58.8/MWh, among the lowest ever for a US project, yet has so far not publicly sought to renegotiate with regulator Bureau of Public Utilities.
Orsted, by contrast, was at the centre of US offshore wind turmoil last year when it said its contract for its 1.1GW Ocean Wind 1 array for $116.8/MWh was uneconomical due to surging inflation and interest rates. Orsted's 1.15GW Ocean Wind 2 was awarded alongside Atlantic Shores at a price of $42.3/MWh.
Despite intense negotiations that included passing a law at governor Phil Murphy’s urging to enable Orsted to retain full value of its federal investment tax credits (ITC), Orsted ultimately walked away from both projects, leaving millions of dollars in supply chain investment in limbo.
Beyond its initial project, Atlantic Shores has submitted a construction and operations plan (COP) to BOEM for a proposed 2.35GW Atlantic Shores North array in acreage held adjacent to its ongoing project.
It also owns another lease in the New York Bight holding around 1GW of capacity or more.
Atlantic Shores has a preferred supplier agreement with turbine OEM Vestas and has signed on as the first tenant at the New Jersey Wind Port, governor Murphy's signature achievement aimed at positioning the state as a regional hub for offshore wind.
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