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“They really pissed me off,” Gov. Phil Murphy told WNYC’s Nancy Solomon during his “Ask Governor Murphy” radio show earlier this month, following Danish energy developer Ørsted‘s stunning decision to pull the plug on the Ocean Wind 1 and Ocean Wind 2 offshore wind farms that were slated to be built off the coast of the Jersey Shore. Citing increased economic strains and challenges of project development, Ørsted announced the decision by its board of directors on the evening of Oct. 31.

“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” said David Hardy, group executive vice president and CEO Americas at Ørsted. “As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2.”

The two projects, which had been slated for adjacent locations some 15 miles off the coast of Atlantic City and Ocean City, were projected to create a combined capacity of 2,200 megawatts and to power up to 1 million homes while creating thousands of jobs.

Ocean Wind 1, which had gained momentum earlier in 2023, including a key federal approval in July – seemed on track to be the state’s first offshore wind farm. Then, in late August, Ørsted announced the project was being delayed until 2026 because of those supply chain and interest rate issues, as well as the need for more federal tax credits.

That news came on the heels of two polls that showed a major drop in support for offshore wind here in the Garden State.

“We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy,” Hardy added. “I want to thank Gov. Murphy and N.J. state and local leaders who helped support these projects and continue to lead the region in developing American renewable energy and jobs.”

The decision set off a chain of events and reactions, especially given the timing and that offshore wind development had become an important local issue and campaign battleground for the recent legislative elections – particularly in communities up and down the Shore.

And the feedback has been strong and sustained since that bombshell dropped – from stakeholders on all sides of the issue including the governor and legislative leaders to activists who both oppose and support it, and more.

“Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” said Murphy in an Oct. 31 statement. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project. In recognition of the challenges inherent in large and complex projects, my administration in partnership with legislative leadership insisted upon important protections that ensure New Jersey will receive $300 million to support the offshore wind sector should Ørsted’s New Jersey projects fail to proceed. I have directed my administration to review all legal rights and remedies and to take all necessary steps to ensure that Ørsted fully and immediately honors its obligations.”

“Protecting ratepayers while ensuring a safe environment for future generations has always been our top priority. Unfortunately, Ørsted has repeatedly failed to live up to their commitments to meet those goals, and their failure has now impeded our clean energy efforts,” said Senate President Nick Scutari, D-22nd District, and Assembly Speaker Craig Coughlin, D-19th District, in a joint statement also issued Oct. 31. “We will continue to move forward and create a strong green energy economy that is both manufactured and constructed with union labor. However, these projects cannot be realized without absolute ratepayer protection. We will utilize every taxpayer safeguard included in the prior law and make all necessary legislative changes to protect New Jersey residents moving forward.”

Republicans – who have long been skeptical of the feasibility of offshore wind and were particularly concerned about Ørsted – came out swinging following the announcement. “Republicans stated for months that Ørsted’s offshore wind project was unsustainable and would inevitably fail. Ørsted’s decision today confirms that Republicans were right when we said this was too much, too fast, and too costly,” said Senate Republican Leader Anthony Bucco, R-25th District. “Their financial challenges were glaringly obvious, yet Democrats ignored the warning signs to rush through Gov. Murphy’s extreme energy master plan without any due diligence. This is just another example of how Gov. Murphy’s outrageous energy master plan is coming back to hurt New Jersey taxpayers.”

“On behalf of the taxpayers and ratepayers of New Jersey, we demand a full accounting and report to the Legislature disclosing the amount of money to date the state has given to Ørsted, including from the state Economic Development Authority, by date, purpose and amount for each grant, loan, tax credit, or any other financial assistance,” the Assembly Republican Caucus wrote in a Nov. 1 letter to Murphy.

Republicans have also called for hearings, more transparency and other actions on the matter. “Gov. Murphy and Trenton Democrats must account for all the money that has been squandered on their failed extreme energy policy,” said Bucco on Nov. 3. “By turning a blind eye to the warning signs that this program was failing and continuing to rush the process along, Murphy and the BPU [New Jersey Board of Public Utilities] failed to close the deal, and now the state risks losing $300 million. It’s like Gov. Murphy is played checkers while Ørsted is playing chess.”

“Taxpayers shelled out almost $1 billion for infrastructure to support wind farm owners who then walked away,” said Sen. Mike Testa, R-1st District, on Nov. 3. “An additional billion would have been wasted in tax credits for Ørsted, which they thankfully won’t be getting – so we’re told.”

Murphy further addressed the controversy about what Ørsted has received or not received — especially pertaining to the $300 million, which includes $200 million that was deposited into escrow and an additional $100 million posted by Ørsted as a guarantee to build the project. During a gaggle with reporters Nov. 3, the governor said that the state is gearing up for a fight.

“We are going to fight tooth-and-nail to keep this money,” Murphy told reporters. “I am really angry at these guys. They have really badly behaved, let down a lot of folks. And I just cannot tell you how angry I am at these folks. There is this myth out there that we gave them some money. The opposite is true. We have not given Ørsted one dime, nor will we. They have – in two separate buckets – $300 million that we are going to fight like hell to keep. I assume it is going to be a legal battle by them — but they did not do what they said they were going to do. And we are going to make them pay for that.”

“When the Senate Budget Committee considered the legislation [Assembly Bill 5651/Senate Bill 4019] that allowed Ørsted to qualify for a federal tax credit, I demanded a non-refundable, irrevocable cash bond of $100 million to be put in escrow as a guarantee,” said Senate Budget Chairman Paul Sarlo, D-36th District, on Nov. 9. “It was a definitive commitment intended to hold their feet to the fire. Now that Ørsted is defaulting on the agreement and breaking its promise, I am demanding that the Attorney General act immediately to secure the $100 million which was required to be deposited into a state bank account immediately by the legislation. The cash bond was included because the Legislature was always suspect of Ørsted’s ability to meet their financial commitment.”

Buzz grew about what that legal fight would look like when it was learned that Ørsted tapped powerhouse former Attorney General Chris Porrino, a partner and chair of the Litigation Department at Lowenstein Sandler LLP, to represent the company. But an Ørsted spokesperson noted to NJBIZ that Porrino had been on the company’s legal team, serving in various ways, for about a year. Ørsted has not commented further publicly about any next steps or potential legal fights.

And the company has had no new public announcements, statements or developments to report regarding the situation. But Ørsted has said it intends to retain the seabed lease area and consider the best options as part of an ongoing portfolio review.

The state’s third approved project, Atlantic Shores Offshore Wind – slated to be about 10-20 miles off the coast between Atlantic City and Barnegat Light – remains on track and holds the potential to bring power to more than 700,000 homes and generate $1.9 billion in economic activity while creating 18,000 jobs. Stakeholders for the project, a 50/50 partnership between Shell New Energies US and EDF Renewables, said they remain committed to delivering safe, reliable, renewable power and establishing a thriving domestic offshore wind industry anchored in the Garden State.

“This means supporting New Jersey in meeting its clean energy goals and driving economic growth,” said Joris Veldhoven, CEO, Atlantic Shores Offshore Wind, in a Nov. 8 statement. “Despite these headwinds, we are actively engaged in conversations with the administration, regulators, and elected leaders across New Jersey that confirms the state’s commitment to offshore wind, and we are working with them to identify viable solutions that will not only preserve the progress made thus far in the industry, but also create a landscape that will enable the successful execution of the Atlantic Shores portfolio.”

And despite this major speed bump, Murphy has reiterated his support and hopes for the nascent offshore wind sector here in New Jersey – pointing to the number of bids for projects the state has received in its latest solicitation.

“Ultimately, as we have seen in other states recently, offshore wind projects … have been impacted by a combination of interest rate escalation, supply chain cost increases, and inflation,” said Murphy in his Oct. 31 statement. “And while today is a setback, the future of offshore wind in New Jersey remains strong. In recent weeks, we’ve seen a historically high number of bids into New Jersey’s ongoing third offshore wind solicitation, and the Board of Public Utilities will shortly announce two additional solicitations related to our first-in the-nation State Agreement Approach to build an offshore wind transmission infrastructure. I remain committed to ensuring that New Jersey becomes a global leader in offshore wind, which is critical to our economic, environmental, and clean energy future.”

While offshore wind was an issue in the elections, Democrats held both legislative chambers. However, offshore wind remains polarizing — with supporters touting its necessity to transition to a clean energy future while galvanizing the economy versus activists and local leaders (especially in towns like Ocean City and those on Long Beach Island) who point to a rash of whale deaths and remain concerned about its viability as well as the effects on sightlines, noise, and disruption of local communities’ economies and quality of life.

“Ørsted should not be let off the hook for the damages it has caused our state and the marine mammals who inhabit and migrate along our shores. Since 2019 when Ørsted was first awarded the Ocean Wind 1 lease area and started its survey and development work, we’ve seen a tremendous increase in the deaths of marine mammals,” said Green Oceans Spokesman David Shanker in a statement. “Instead of giving this international conglomerate – that time and time again has broken from its agreements with the state – $300 million back, those funds should go towards [sic] preserving our shore communities and marine ecosystems while finding green energy solutions that don’t kill whales and destroy coastal communities.”

“This is a great day for the people and businesses of Cape May County,” said Cape May County Commissioner Director Len Desiderio in a statement following the Ørsted announcement. “This is a great day for the whales and dolphins. The massive, reckless experiment known as Ocean Wind 1 has been stopped and Ocean Wind 2 abandoned.”

Desiderio said that while many said they were wasting their time fighting, he is happy that the Board of Commissioners, many in the business community, and other grassroots groups did not give up the fight.  “We are small county down here at the southernmost point of New Jersey, but we knew all along that our economy, our environment, our very way of life was at stake,” said Desiderio. “Ørsted has walked away from Ocean Wind 1, but we are not walking away from this fight. We intend to redouble our efforts to ensure that our horizon remains free of massive offshore industrialization.”

Meanwhile, a group of nearly 40 longtime offshore wind and green energy proponents released a joint statement reiterating that they stand united in their unwavering support for responsibly developed offshore wind projects. “Offshore wind will remain one crucial piece to New Jersey’s clean energy puzzle. It promises energy independence, creation of local, family-sustaining jobs, continued investments in workforce development, and increased public health, particularly for those disproportionately impacted by fossil fuel pollution,” the advocates said in their statement. “There are inevitable hurdles in any new industry and global economic headwinds, but there is no doubt that the winds of progress continue to blow. We eagerly anticipate the third round of offshore wind project awards and remain steadfast in support of New Jersey achieving 100% clean energy.”

On his radio show, Murphy stressed that Ørsted let the state down. “They did not live up to their word,” said Murphy. “They pulled out and they did not do what they said they were going to do. And we are going to make them pay. I am sure there is going to be a big legal fight over what is ultimately a $300 million swing, which they owe us. As opposed to this mythmaking, which gets into the politics, that we somehow gave them $1 billion. We did not give them one dime.”

The governor emphasized that the state has not given Ørsted any money — and certainly not $1 billion. “In fact, the money that will change hands is going to come from them to us – because they did not do what they said they were going to do,” Murphy continued. “It is a bump in the road – that’s the bad news. The good news is we are not going to relent.”

As he closed out the discussion on that topic with Solomon, Murphy also shot back at people taking a victory lap over this bump in the road. “These are thousands of union jobs that are really high-end, high-skilled, pay a lot of money,” Murphy explained, questioning why anybody would root for a project that yields those type of jobs to be scrapped and connecting it to the strong election night for Democrats.

“And I think that is another area where voters are a lot smarter than those guys gave them credit for,” said Murphy. “They said, ‘wait a minute, this is a huge economic engine.’ It is not just clean energy. It is not just the right thing to do in a state that is as exposed to climate change as we are. But it is a big job spinner. I said this publicly to the other side – what’s your plan B for the South Jersey economy? What is your plan B? And the answer is that they did not have a plan B, which is why, among other reasons, we are going to go forward and figure this out. It is going to take us a little bit longer, but we will get there. We will be America’s No. 1 offshore wind state – at the end of the day.”