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NJ Governor Signs Tax Break for Offshore Wind Farm

Some value the tax break at nearly $1 billion.

A giant monopile, the foundation for an offshore wind turbine, sits on rollers at the Paulsboro Marine Terminal in Paulsboro, N.J. on Thursday, July 6, 2023, when New Jersey Gov. Phil Murphy planned to sign a bill granting a tax break to offshore wind developer Orsted.
A giant monopile, the foundation for an offshore wind turbine, sits on rollers at the Paulsboro Marine Terminal in Paulsboro, N.J. on Thursday, July 6, 2023, when New Jersey Gov. Phil Murphy planned to sign a bill granting a tax break to offshore wind developer Orsted.
AP Photo/Wayne Parry

PAULSBORO, N.J. (AP) — New Jersey Gov. Phil Murphy signed a bill Thursday giving a tax break to Danish offshore wind developer Orsted for the first of two energy projects it plans in the waters off New Jersey.

The governor, a Democrat, said the financial aid ensures that offshore wind projects and the jobs they create happen in New Jersey rather than in competing states.

Before the ink was dry on that bill, he faced pressure from another offshore wind company looking for similar assistance.

The bill allows Orsted to keep federal tax credits that it otherwise would have been required to pass along to New Jersey utility ratepayers. Lawmakers who narrowly approved the bill last week said the aid was needed to help Orsted deal with inflation and the lingering effects of the COVID-19 pandemic.

"If we don't figure out a solution, this doesn't get done in New Jersey," Murphy said after the ceremony at the Paulsboro Marine Terminal, where the huge supporting structures for wind turbines, called monopiles, are manufactured. "We know war in Europe, inflation, supply chain — these projects have gotten a lot more expensive, and we're not the only place that's dealing with that. Either we get this bill done and the industry thrives here, and the jobs that are associated with it, or it goes somewhere else."

A Republican state senator, Edward Durr, put the value of the tax break at nearly $1 billion.

Atlantic Shores said this week that it, too, wants government assistance to build its own wind farm off the southern New Jersey coast, warning that the project is "at risk" without additional financial assistance from the government.

Murphy said he is "open-minded" toward the Atlantic Shores request. Atlantic Shores is a joint partnership between Shell New Energies US LLC and EDF-RE Offshore Development LLC.

Republicans panned the deal as an unwise giveaway to a foreign company whose product is inherently unprofitable.

"Democrats like Governor Murphy who often complain about corporate welfare had absolutely no problem giving $1 billion to a foreign wind farm developer at the expense of New Jersey ratepayers," Republican state Sen. Michael Testa said in a news release. "Other wind farm developers are already lining up at the trough of big government begging for their own bailouts, which Governor Murphy is likely to give them. It's more proof that wind power doesn't make economic sense without massive government subsidies."

Environmental groups praised the move, criticizing opponents of offshore wind who blame site preparation work for the deaths of 53 whales on the U.S. East Coast since December. Federal and state environmental officials say there is no evidence the deaths are related to offshore wind preparation.

"Offshore wind and this bill are essential to growing New Jersey's economy, fighting for climate justice and clean air, and creating good jobs for working families," said David Pringle, a member of the Clean Water Action environmental group. "The climate crisis is the greatest threat to whales, so we must invest in offshore wind just as the shipping, plastic and fishing industries have to do more to avoid marine mammals being killed from ship strikes, plastic pollution and fishing gear entanglement."

The bill signing came a day after Orsted's Ocean Wind I project received clearance from the U.S. Bureau of Ocean Energy Management to begin construction on a wind farm 13 to 15 miles off the coast of Atlantic City and Ocean City. Additional approvals are still required at the federal and state levels, but Orsted said it expects to have them in hand by the second quarter of 2024.

It plans to begin construction on the wind farm, with nearly 100 wind turbines, this fall. It aims to provide enough electricity to power 500,000 homes.

Orsted also has approval to build a second wind farm off New Jersey's coast, but that project is not as far along in the regulatory process.

At the ceremony, Murphy also signed bills to incentivize film production in the state, and to help finance housing and commercial projects in economically struggling areas.

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