OCEAN CITY – An offshore wind company has withdrawn its agreement with the Maryland Public Service Commission as it looks to reposition its Skipjack project.
Last Thursday, Ørsted announced it will reposition Skipjack Wind, a 966-megawatt project it’s developing off the Delmarva coastline. After reviewing the Maryland Public Service Commission orders approving its two-phased project, the company reports the payment amounts for offshore wind renewable energy credits (ORECs) are no longer commercially viable because of market conditions – including inflation, high interest rates and supply chain issues.
“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 is highly supportive of offshore wind, for future offtake opportunities,” said David Hardy, group executive vice president and CEO Americas at Ørsted. “As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available.”
Officials in Ocean City said they will continue to monitor offshore wind activity and any developments that result from Ørsted’s announcement. In a statement Monday, Ocean City Mayor Rick Meehan said that while Ørsted has announced it is withdrawing its agreement, he had concerns it could lead to requests for additional funding.
“The Town of Ocean City recognizes that Ørsted is pulling out of their agreement with Maryland Public Service Commission for what they say is a ‘repositioning of the project,’” he said. “What this means is that the costs they can pass on to Maryland Rate Payers no longer supports the cost of their project and they will be seeking additional funding from Maryland rate payers and tax payers. Exactly what that cost is and at what point does the cost outweigh the questionable benefits of these projects, even possibly compared with other alternatives, is something that is yet to be determined by the State Legislature.”
He continued, “The bottom line is that they will be seeking additional funding for their for profit venture. I think that it is only reasonable to expect that US Wind will fall in line with the exact same request. Again they will be asking for more money from Maryland Tax payers to fund community benefit packages for Delaware resorts and electricity that will be supplied to Delaware residents at a cost to Maryland rate payers.”
For his part, City Manager Terry McGean said he hopes the Ørsted announcement will lead to further reevaluation of offshore wind development in Maryland. He said there were unknowns regarding offshore wind projects and their impacts on marine life, fishing, navigation, property values, and the like.
“The city will be carefully watching how the Maryland Public Service Commission reacts to the Orsted withdrawal,” he said. “I am concerned that US Wind will attempt to obtain the Ørsted Offshore Renewable Energy Credits and use them to fund the final expansion of their project or that Ørsted and US Wind will return to the General Assemble and request even larger ratepayer subsidies.
“The right thing for Maryland to do now is put an immediate halt to all current and future Maryland subsidies for these projects until all their potential negative impacts can be thoroughly investigated.”
While Ørsted has pulled out of its agreement with the Maryland Public Service Commission, the company will continue with the development and permitting process for the combined project, including its submission of an updated Construction and Operations Plan (COP), according to Ørsted. In a statement last week, Hardy thanked Gov. Wes Moore and the commission for its support.
“We are grateful to Governor Moore, the Maryland Public Service Commission and the State of Maryland for their steadfast partnership and support as we have worked diligently to develop Skipjack Wind under challenging economic circumstances,” he said. “We fully support the state’s leadership as they pursue their ambitious offshore wind goal. We also thank the State of Delaware for its collaborative approach to supporting Skipjack Wind’s development.”
Last April, Moore signed the Promoting Offshore Wind Energy Resources (POWER) Act into law, which quadrupled Maryland’s offshore wind generation goals from about two gigawatts to eight-and-a-half gigawatts by 2031. While the latest news presents a setback in the state’s clean energy goals, Ørsted reports it will continue to invest in several project.
“In addition, Ørsted maintains valuable uncontracted seabed along the East Coast that is strategically positioned to create value and continue growing the U.S. industry,” a statement from Ørsted reads. “In the Northeast, approximately 10 GW of offshore wind energy is expected to be awarded this year, and the Mid-Atlantic has additional solicitations expected in the next 1 – 2 years.”
