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Denmark’s Ørsted A/S (CPH:ORSTED) has abandoned its current Offshore Renewable Energy Certificate (OREC) arrangements for the 966-MW Skipjack Wind development, finding the terms financially unsustainable due to current market conditions.
The energy group said late on Thursday that it has withdrawn from the Maryland Public Service Commission orders approving the Skipjack 1 and 2 projects off the coast of Maryland because the payment amounts for ORECs were no longer commercially viable for reasons including inflation, high interest rates, and supply chain constraints. It announced that it will “reposition” Skipjack Wind for future off-take opportunities.
The announcement comes almost three months after Ørsted dropped the development of Ocean Wind 1 and 2 offshore wind projects in New Jersey due to supply chain issues and interest rate hikes.
The two Skipjack projects are still moving forward. Ørsted will continue development and permitting, and update its Construction and Operations Plan for approval by the Bureau of Ocean Energy Management (BOEM).
“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’s highly supportive of offshore wind, for future offtake opportunities,” David Hardy, Executive Vice President and CEO of Region Americas at Ørsted, said in a statement.
“As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available,” Hardy added.
The 120-MW Skipjack 1 project secured ORECs at a levelised price of USD 131.93 (EUR 121.7) per MWh in Maryland’s 2017 offshore wind tender. The project’s 846-MW extension, Skipjack 2, was successful in December 2021, securing ORECs at a levelised price of USD 71.61/MWh. In both exercises, the ORECs were awarded for a term of 20 years.
(USD 1.0 = EUR 0.922)
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