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Shell, EDF Renewables form venture to buy offshore wind lease off New Jersey

Units of Royal Dutch Shell PLC and French utility Electricité de France SA formed a joint venture to acquire a lease off the coast of New Jersey with the potential for 2,500 MW of offshore wind capacity.

EDF unit EDF Renewable Energy Inc. and Shell's Shell New Energies US LLC formed the 50/50 joint venture, called Atlantic Shores Offshore Wind LLC, to acquire US Wind Inc.'s 183,353-acre lease within the New Jersey Wind Energy Area for $215 million. US Wind is owned by Italian renewable energy developer Renexia SpA and Toto Holding Group.

The deal is subject to approval from regulatory bodies, and construction will depend on a positive final investment decision. It is the second joint venture Shell New Energies has established for offshore wind development in the U.S. in the past week. Mayflower Wind Energy LLC, a venture between Shell and a unit of EDP Renováveis, won a lease Dec. 14 to establish wind facilities off the coast of Massachusetts.

US Wind bid just over $1 million in a federal auction in 2015 for the New Jersey lease. US Wind President Riccardo Toto said the sale will allow the company to turn its attention to its other projects such as its Ocean City Offshore Wind Project in Maryland and an offshore wind energy area in South Carolina.

"US Wind is a recognized leader in the fast-developing offshore wind energy sector in the United States and we remain fully committed to realizing the many significant benefits of our Maryland offshore wind energy project — eventually the largest commercial offshore wind project in the country," Toto said in a news release Dec. 20. "The sale of our New Jersey lease is consistent with our strategy to develop and optimize our assets while focusing on those projects that enhance our leadership position."

For EDF Renewables, the purchase comes after the New Jersey Board of Public Utilities rejected its application for the Nautilus Offshore Wind Project (FERN Blueribbon) after concluding the 25-MW demonstration project would be "an unacceptable burden for the state's ratepayers." Instead, the BPU wants to focus on larger, utility-scale projects to fulfill the state's 1,100-MW solicitation of offshore wind capacity as part of Gov. Phil Murphy's goal to procure 3,500 MW of offshore wind power by 2050.

In a separate news release, EDF Renewables President and CEO Tristan Grimbert said the New Jersey lease purchase will help the company meet its goal to double its global renewable energy capacity to 50,000 MW by 2030. EDF Renewables has about 2,800 MW of offshore wind in development or operation across Europe.

"[The lease purchase] solidifies EDF Renewables' ambitions to leverage its depth of experience in the European offshore wind market in the emerging U.S. market," Grimbert said. "As the costs of offshore wind are declining, the U.S. offshore wind industry is quickly advancing with strong federal and state support. The industry is well-positioned to meaningfully contribute to the New York and New Jersey economies through employment and supply chain opportunities."