Rising costs are threatening offshore wind project — and this N.J. town’s future, mayor says
“We’re going to live or die with this port,” he said during a phone call Thursday about his hometown industry’s reboot from petroleum refining to wind. A sprawling plant in Paulsboro manufactures parts for offshore wind projects. “We have nothing to fall back on.”
Last week, the main client for the plant said it may ditch plans to buy hundreds of 400-foot long, 3-million-pound monopile poles to mount offshore wind turbines because project costs were soaring beyond expectations. The state spent $225 million upgrading the Port of Paulsboro to handle the massive equipment. EEW, a German company, chipped in $250 million to build and house offshore wind parts, and planned to spend another $250 million after the state approved federal tax credits in July to offset costs.
A recent Washington Post headline said: “The future of East Coast wind power could ride on this Jersey beach town,” pointing to Ocean City, where the first of the state’s wind farms is now scheduled to come online in 2026, two years behind schedule.
The financial uncertainty is more than just Stevenson’s problem.
EEW American Offshore Structures First Monopile ready for paint with team of site workers in March. ©Jeremy Messler Photography LLC
Officials from Ørsted, the Danish wind developer, told investors that supply chain problems and other issues may cause it to write off more than $2.2 billion in losses and could lead to the cancellation of its work off the Jersey Shore and other areas on the East Coast. The company is building the state’s first offshore wind farm, Ocean Wind 1, and has plans for another.
“We are willing to walk away from projects if we do not see value creation that meets our criteria,” Ørsted chief executive officer Mads Nipper said on an investor call last week, according to an unofficial transcript reported by The New York Times.
The wind projects are a critical part of Democratic Gov. Phil Murphy’s energy plan, which calls for the Garden State to get 50% of its power from renewables by 2035 and 100% by 2050. He pledged to bring 7,500 offshore wind megawatts online by 2035.
Former state Senate President Steve Sweeney, also a Democrat, helped launch the offshore wind initiative more than a decade ago in a bill-signing with former Gov. Chris Christie, a Republican – in Paulsboro. He said he thinks the port is still on track for up to 600 jobs from around 100 now, and a manufacturing facility in Lower Alloways Creek in Salem County will build and ship 500-foot high generators to mount on top of the monopiles.
“What’s going now is not just here, it’s going on up and down the coast right now,” Sweeney told NJ Advance Media last week. “It’s not just a New Jersey issue. The whole industry has been affected by this supply chain issue.”
Wednesday, September 22, 2021 – Gary Stevenson stands at the entrance to the Paulsboro High field where he played football in his high school years. He later worked in the refineries, visible in background, and currently serves as the mayor of his hometown. Michael Mancuso | NJ Advance Media for NJ.com
Sweeney said the rise in interest rates has changed the economics of the projects, but he is still bullish.
“I’m betting on it,” he said. “I think the jobs are going to happen. If not Ørsted, it’s going to be someone else. It’s a marathon, not a 100-yard dash.”
Sweeney, who represented parts of Gloucester and Salem counties where the wind ports are located, was defeated in a re-election bid in 2021 after more than 20 years in the Legislature. He now leads a public policy center at Rowan University.
But while Sweeney has confidence, Stevenson is not so sure.
“They are running out of money to do this, that’s what I heard,” said Stevenson, who is also a Democrat. “There’s no lifeline for us. It’s like the ship is sinking and there’s no life boats.”
Stevenson said he and Sweeney have had their issues over the years but conceded when he was leading offshore wind development as the president of the Senate, things were getting done.
Now Stevenson also wants a seat at the table.
“Sometimes you gotta just grab people by the throats and drag them in,” he said. “I don’t believe in the whole political correctness thing. You got to treat big businessmen like they need to be treated. There’s times you gotta kick ass and times you gotta kiss ass.”
Ocean Wind 1 is the first of three wind farms approved by the state. The company won approval, in part, by promising to also manufacture some or all of the component parts in Paulsboro and Lower Alloways Creek.
Staff writer Karin Price Mueller, KPriceMueller@NJAdvanceMedia.com, contributed to this report.
Bill Duhart may be reached at bduhart@njadvancemedia.com.