Ørsted pulls Skipjack offshore wind projects out of Md. state contracts

Ørsted A/S announced Jan. 25 the suspension of its Skipjack offshore wind projects off the coast of Maryland, saying contracts approved by state regulators in 2017 and 2021 are no longer economically viable, and that the company plans to seek other offtake arrangements.

"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," Ørsted group Executive Vice President and Americas CEO David Hardy said in a Jan. 25 statement. "As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available. We will continue to advance Skipjack Wind's development milestones, including its construction and operations plan."

The pause in spending on the 120-MW Skipjack Offshore Wind Project and 846-MW Skipjack 2 Offshore Wind Project follows the October 2023 cancellations of Ørsted's 1,100-MW Ocean Wind 1 and 1,148-MW Ocean Wind 2 projects, which resulted in impairments for the Denmark-headquartered offshore wind giant's US East Coast projects equivalent to approximately $4 billion.

Ørsted CEO Mads Nipper told analysts and investors in November 2023 that all development work on Skipjack was paused, and the company would "either cease the development of the project or pursue alternative commercial solutions" absent adjustments to the Offshore Wind Renewable Energy Credits awarded by the Maryland Public Service Commission.

In 2021, Ørsted pushed back Skipjack 1's commercial startup date to mid-2026 from November 2022. Skipjack 2 had also been expected to come online in 2026.

US offshore wind developers like Ørsted and its development partner Eversource Energy continue to reel from persistently higher interest rates, supply chain bottlenecks and soaring prices.

Ørsted announced Jan. 24 that it agreed to buy Eversource's 50% stake in the 924-MW Sunrise Wind project if it wins an uplifted tariff in New York's fourth offshore wind solicitation.

The 50/50 joint venture will remain in place if the project is unsuccessful in its bid, after which the companies will evaluate next steps. Final proposals in the solicitation were due Jan. 25, with contract awards slated for February. In a separate statement Jan. 25, the companies said they had submitted a revised proposal for Sunrise Wind.

Eversource has said it expects to write down up to $1.6 billion in its fourth-quarter 2023 earnings as a result of the offshore wind issues.