Offshore wind developer Atlantic Shores seeks to cancel a 1.5 GW OREC contract with New Jersey, stating that the Presidential Wind Memorandum and subsequent actions have adversely affected the project's viability.

Atlantic Shores Petition to Terminate OREC Contract Amidst Uncertainty in Federal Permitting Process

In a recent development, Atlantic Shores, a joint venture between EDF Renewables and Shell, has filed a petition with the New Jersey Board of Public Utilities (NJBPU) to terminate the existing offshore renewable energy certificate (OREC) order for the Atlantic Shores Project 1. The petition, filed on June 4, 2023, comes amidst uncertainty in the federal permitting process.

According to Stephanie Francoeur, Senior Vice President of Marketing & Communications at Oceantic Network, the decision is a result of the current unpredictability surrounding the federal permitting process. This unpredictability was triggered by the Presidential Wind Memorandum on January 20, 2023, and subsequent developments that have created significant uncertainty in the offshore wind industry and have directly impacted the feasibility of the Atlantic Shores Project 1.

The recent withdrawal of the Air Permit is the primary reason for the request, as the developer states that it prevents them from proceeding with the project as a legal matter. This setback follows last year's rebid of the project in New Jersey's fourth solicitation, where Atlantic Shores sought better terms. However, the solicitation was cancelled in February 2023, also citing uncertainty caused by recent federal actions.

Despite these challenges, Atlantic Shores remains committed to the New Jersey project. The developer has listed milestones achieved towards the construction of the project, including securing all federal permits, completing preferred supplier and reservation agreements for the majority of the work, and investing in the local supply chain and workforce.

The petition to rescind the OREC contract was not initiated by Atlantic Shores. Reclaim The Grid filed the petition, citing reasons similar to those presented by Atlantic Shores.

It is important to note that the petition does not mean the project has been cancelled altogether. Oceantic Network, a US offshore renewable energy organization, has pointed out that the petition represents a pause, not a cancellation, of the project. Shell has paused its involvement in the Atlantic Shores project and written off an investment of USD 996 million, but Atlantic Shores (EDF Renewables) continues to be engaged in the New Jersey project.

Offshore wind is described as the only proven, shovel-ready solution offering long-term price stability, well-paying jobs, and millions of dollars of existing steel manufacturing and workforce investments. It is critical that the federal government reopens the permitting process and offers a predictable path for American offshore wind projects to move forward. The statement from Oceantic Network emphasizes the need to ensure long-term grid security for New Jerseyans and prevent other states from facing a similar fate.

Over 45 banks responded to the bank sounding initiated by Atlantic Shores in preparation for taking a final investment decision (FID) and achieving financial close in 2025. The developer's commitment to the project is evident in these preparatory steps, despite the current challenges.

The decision to terminate the OREC contract was awarded for the first Atlantic Shores project farm in 2021, with the stipulation that the first phase of the project would start producing electricity by September 2027 and the remaining phase would reach commercial operation by April 2028. The impact of this decision on the timeline and future of the project remains to be seen.

As the situation unfolds, it is clear that the offshore wind industry in the US is facing unprecedented challenges. The need for a predictable and supportive federal permitting process is more crucial than ever to ensure the continued growth and success of offshore wind projects like the Atlantic Shores Project 1.