OCEAN CITY, N.J. - Orsted, the offshore wind power company, is seeking to be released from its commitment to pay a $300 million guarantee to the state of New Jersey after it abandoned its Ocean Wind I and II projects in southern New Jersey. The Danish firm cited financial infeasibility, supply chain issues, inflation, and a failure to obtain sufficient government tax credits as reasons for scrapping the projects.

In response to Orsted's cancellation of the projects, the company wrote to the New Jersey Board of Public Utilities, declaring its withdrawal from the agreement it previously signed with the state. The agreement stipulated that Orsted would forfeit the $300 million guarantee if it failed to construct Ocean Wind I. Orsted claimed that the board had not taken final action to approve the agreement, hence their decision to withdraw.

However, the New Jersey Board of Public Utilities asserted that it had already approved an escrow agreement with Orsted on September 27 and a guarantee agreement on October 11. Orsted, on the other hand, stated in an email on Monday that they withdrew their filings because they are no longer pursuing the tax incentives associated with the now-abandoned Ocean Wind I project.

In July, New Jersey granted Orsted a tax break that would have allowed the company to retain federal tax credits that it would have otherwise been obliged to return to electric ratepayers, had the project been completed. So far, Orsted has transferred $200 million to an escrow account with the state.

The future course of action is currently uncertain. The agreement between Orsted and the state establishes that both parties will refrain from suing each other in the event of a dispute, unless they first attempt and fail to find a resolution through negotiations.

Governor Phil Murphy of New Jersey expressed his anger over Orsted's cancellation of the two large projects, highlighting that his administration will hold the company accountable for fulfilling its obligations. A spokesperson for Governor Murphy stated that they are reviewing Orsted's recent statements and correspondence and will take necessary measures to ensure the company honors its commitments to the state.

Under the agreement, Orsted was required to provide a $100 million guarantee for the completion of Ocean Wind I by the end of 2025. Additionally, the company had committed to contributing an extra $200 million towards the development of the offshore wind industry in New Jersey. The cancellation of the two projects resulted in a write-off of $4 billion for Orsted, largely attributed to associated costs.

Nevertheless, New Jersey still has several other offshore wind projects in different stages of development. In August alone, four new proposals were submitted, joining the only remaining project from the initial three approved by the state, Atlantic Shores. Despite hinting at seeking additional assistance in a statement, Atlantic Shores, a project by Shell New Energies US and EDF Renewables North America, affirmed its commitment to moving forward with its project.