Wind

Orsted presses on with New Jersey project supply chain contract despite struggles

Developer signs engineering services agreement with local supplier Riggs Distler as financial challenges and opposition mount

While Orsted’s struggling US portfolio remains headline news, the developer continues to advance projects across the Northeast, including signing a major supply chain contract for 1.1GW Ocean Wind 1 with New Jersey-based infrastructure firm Riggs Distler.

Orsted said Friday its new contract with Riggs Distler is for onshore heavy civil, mechanical, and electrical services for foundations supporting the massive turbines.

The New Jersey-bound project was recently approved by the federal government and Orsted will begin installing Ocean Wind 1’s up to 98 GE Haliade-X turbines next year.
This is Rigg Distler’s third contract with Orsted.

“Given their experience successfully delivering advanced foundation components for two of our Northeast projects - South Fork Wind and Revolution Wind - Riggs Distler will play an integral role in advancing our Ocean Wind 1 project,” said Hina Kazmi, the project’s director.

The partners declined to reveal terms, only saying Riggs Distler will deploy over 145 personnel, including more than 125 skilled union workers, and work with Maryland-based, minority-owned Crystal Steel Fabricators, and New York technology manufacturer Ljungstrom.

This is just one of many supply chain contracts signed by the Danish developer, which plans to pump $695m into the local economy and is already the “dominant partner” with German steel fabricator EEW in a monopile plant in Paulsboro.

A report by the Sweeney Centre at Rowan College on offshore wind said that Orsted has already poured $160m into the foundation maker for its first phase, but that its phase two investment of another $250m is jeopardised by the developer’s tenuous grip on the project’s economics.

Inflation and high costs of financing have developers reeling around the world, but especially so in the US, where offtake is often awarded at low prices compared to its costs.

The economic “headroom” in the US projects is lower, Orsted CEO Mads Nipper told investors in August, when he revealed the developer might take a $2.34bn impairment on its US offshore wind portfolio.
The New Jersey legislature passed a law last summer specifically granting Orsted the full value of investment tax credits (ITC) included in landmark federal climate legislation, the developer saying without which the project was no longer viable.

New Jersey’s law on offshore wind solicitations demands developers return the value of federal tax credits to ratepayers.

The Inflation Reduction Act (IRA) offers ITC worth 30% the capital costs of the project assuming conditions are met, with up-to 20% adders for investing in domestic content and/or communities impacted by fossil fuel or industrial pollution.

Despite getting the law, the developer now says it has struggling to gain the adders and might still withdraw the project due to lack of returns.

Protests

Protests against the project are mounting as well, fuelled by rumours that the industry is behind an ongoing rash of whale strandings on the Atlantic coast that have enraged swathes of the public.

Last Tuesday, six demonstrators were arrested for stopping traffic and trying to interfere with the project's onshore construction in the coastal community of Ocean City in Cape May County.

The developer had begun investigative work for the project’s landfall site and onshore transmission route along existing rights of way to the substation at the former coal-fired power plant, BL England, from where it will feed the grid.

The type of work “is common practice for many types of gas, water and sewer utility projects that install mains beneath the road surface,” Ryan Ferguson, communications adviser for Orsted Americas region, told Recharge.

Local media reported that the arrested protestors were charged with failure to disperse and obstruction of public pathways.

Both Ocean City and Cape May County have opposed the project and are involved in litigation with Orsted.
(Copyright)
Published 15 September 2023, 21:30Updated 3 October 2023, 06:56
AmericasUSOrstedOcean Wind 1