Maryland Governor Enacts Bill that Enables State to Re-Allocate Ørsted’s Skipjack ORECs to US Wind

May 13, 2024, by Adrijana Buljan

Maryland Governor Wes Moore signed a new offshore wind bill on 9 May, under which the State will create a schedule for offshore wind solicitations until 2031 and revise previous solicitations. The latter will allow the State to re-allocate the support awarded to Ørsted’s Skipjack project, from whose power purchase agreement the developer withdrew, to other eligible offshore wind projects.

The bill, HB 1296, will enter into force on 1 June 2024, when the Maryland Public Service Commission (PSC) will open a revised Round 2 offshore wind project proceeding.

The PSC selected the projects under the Round 2 solicitation in 2021, awarding Offshore Renewable Energy Credits (ORECs) to Ørsted’s 846 MW Skipjack 2 project and US Wind’s 808.5 MW Momentum Wind. The two developers were also the awardees in Maryland’s Round 1 solicitation in 2017 when Ørsted secured a power purchase agreement (PPA) for the 120 MW Skipjack 1 and US Wind for its 248 MW MarWin project.

Ørsted later said the company would build Skipjack 1 and 2 as one project.

In January 2024, shortly after cancelling its Ocean Wind projects in New Jersey, Ørsted exited the offtake agreement(s) with the State of Maryland for Skipjack offshore wind projects.

The company said that it was not abandoning the 966 MW Skipjack and that it would reposition it for future solicitations.

The revision of Round 2 projects by PSC now set out in the new law is limited to evaluating revised project schedules, sizes, or pricing, including OREC pricing.

“Any previously approved Round 2 offshore wind project may submit a revised plan for the project by filing an application with the commission. An application for a revised Round 2 offshore wind project shall be limited to addressing revised project schedules, sizes, or pricing, including OREC pricing,” the bill reads.

In the revision, the Commission will look to ensure the State secures as much offshore wind energy capacity as possible under the Round 2 ratepayer protections. This includes at least 800 MW of capacity from revised Round 2 offshore wind projects, if practicable, even if the applications in the new proceeding may result in lower total energy capacity awarded than was previously awarded to the revised Round 2 offshore wind project in its previously approved project application.

The bill also allows Round 1 offshore wind projects to seek approval from the PSC to amend their previously approved orders to increase the maximum amount of ORECs sold under the previous agreements and to modify their project schedule.

According to Oceantic Network, the US offshore renewables industry organisation, the new bill ensures Maryland can quickly re-allocate the Offshore Wind Renewable Energy Credits (ORECs) held by Ørsted to US Wind without exceeding mandated ratepayer caps.

Furthermore, the bill requires the developers to accompany their projects with in-State expenditures and support for the local supply chain.

This, and the plan for future offshore wind solicitations until 2031, which is due to be created by 2025, is part of Maryland’s efforts to meet its 2031 target of 8.5 GW of offshore wind capacity, set last year, and maintain the state’s opportunity to become a hub of offshore wind activity, Oceantic Network says.

“Today’s bill signing demonstrates Maryland’s steadfast commitment to maintaining its strategic manufacturing advantage by working with industry to develop solutions and help reset current markets. The offshore wind industry already contributed massively to the state’s economy and is poised to generate approximately $650,000,000 in investment and support nearly 35,000 jobs,” Liz Burdock, CEO of Oceantic Network, said on 9 May.

“Today’s bill contains provisions that will buttress efforts to realize offshore wind investments in facilities like Tradepoint Atlantic and the Port of Baltimore, as well as spur investments beyond Maryland in ports and manufacturing facilities that can be utilized for projects across the East Coast. Along with the Bureau of Ocean Energy Management’s upcoming Central Atlantic Lease Auction this summer, this bill and future efforts from Maryland will place the state’s 8.5 GW goal firmly within reach.”