Ørsted Terminates Skipjack Wind Offtake Agreement Amid ‘Challenging Market Conditions’

Business & Finance

January 26, 2024, by Adnan Memija

Ørsted has unveiled that it is pulling out of an offtake agreement with the State of Maryland for its 966 MW Skipjack Wind offshore wind project in the US.

Following consultation with the State of Maryland, Ørsted has withdrawn from the Maryland Public Service Commission Orders approving the Skipjack 1 and 2 offshore wind projects.

The Danish offshore wind giant intends to continue advancing development and permitting for the combined project, including submission of its updated Construction and Operations plan to the Bureau of Ocean Energy Management (BOEM), the company said.

The company also added that it will reposition the 966 MW offshore wind project for future offtake opportunities.

“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,” David Hardy, Group Executive Vice President and CEO Americas at Ørsted.

This action follows an extensive review of the Orders, the company said. The payment amounts for offshore renewable energy certificates (ORECs) outlined in Maryland were no longer commercially viable due to challenging market conditions like inflation, high-interest rates, and supply chain constraints, according to Ørsted.

“We are grateful to Governor Moore, the Maryland Public Service Commission and the State of Maryland for their steadfast partnership and support as we have worked diligently to develop Skipjack Wind under challenging economic circumstances,” said Hardy.

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The announcement comes shortly after Ørsted decided to cease the development of the Ocean Wind 1 and Ocean Wind 2 offshore wind projects in New Jersey.

In November 2023, Ørsted said that the discontinuation of Ocean Wind 1 and Ocean Wind 2 is a consequence of additional supplier delays further impacting the project schedule and leading to an additional significant project delay.

While macroeconomic factors are impacting offshore wind projects globally, the company continues to advance, build, and invest in several projects in the US.

With its partner Eversource, its South Fork Wind project serving New York is set to reach full operations in the weeks ahead as the first commercial-scale offshore wind farm in America.

Ørsted also re-submitted its bid for the 924 MW Sunrise Wind offshore wind project in the New York fourth solicitation, which, if awarded, would improve the project’s financial position, according to the company.