In August, New Jersey’s Board of Public Utilities (BPU), responsible for regulating and shaping the state’s energy policies, chose to delay an offshore wind power transmission infrastructure project until at least 2027. According to BPU president Christine Guhl-Sadovy, “[This] action is a direct response to a shift in federal policy under the current administration, which has created significant uncertainty and potential for offshore wind project delays. At the end of the day, it’s very hard to lose 1,500 megawatts of electricity at a time when we need not just clean electricity but more electricity, so it’s tough.”
A recent EnergySage report found that the average New Jersey resident pays about $308 per month for their electricity—25% more than the national average. Because turbines don’t need fuel, the operational costs of wind farms are significantly reduced, offering a cost-effective solution for energy providers and consumers.
In January, President Trump signed an executive order effectively halting new offshore wind development. This order withdrew all previously designated areas for offshore wind leasing and paused the issuance of new or renewed permits, approvals, and loans for wind projects. On July 30, the Bureau of Ocean Energy Management (BOEM) announced that it was revoking a previous designation of 3.5+ million acres of federal waters on the U.S. Outer Continental Shelf to be used as wind energy areas.
While no Magic 8 Ball exists to predict the future, many experts see this announcement as a significant setback for the region’s energy plans. New offshore wind projects, a key source of clean energy that was expected to help stabilize and lower electricity prices, are on hold for the foreseeable future.
Potential ramifications
Since offshore wind turbines don’t use fuel, they cost less to run than traditional power plants dependent on natural gas or coal. The Eastern Seaboard is a densely populated region with high energy demand. By removing a potential source of new generation, the BOEM’s decision could limit the overall energy supply. A constrained supply often results in higher prices; the market becomes more vulnerable to price spikes caused by events like extreme weather or disruptions in fuel supply.
The BOEM’s revocation creates uncertainty and could lead to billions of dollars in “stranded investments” for companies that have already invested in the U.S. offshore wind supply chain. This uncertainty could discourage future investment in the industry, further impacting the long-term energy landscape.
Beyond energy costs, the decision has other significant impacts. The move directly contradicts previous goals to deploy a substantial amount of offshore wind capacity by 2030-20355, which were intended to reduce carbon emissions. The offshore wind industry had also projected significant job creation and economic benefits. Halting these projects could result in job losses and hinder the development of a domestic manufacturing and supply chain renaissance.
The Atlantic Shores wind project: Cancelled
The Atlantic Shores offshore wind project was envisioned as a cornerstone of New Jersey’s clean energy strategy and a model for the burgeoning U.S. offshore wind industry. The project was a joint venture partnership between Shell New Energies US LLC and EDF-RE Offshore Development, LLC. Its development plan included three lease areas spanning more than 400 square miles, with two located approximately 10 to 20 miles off the southern New Jersey coast, situated between Atlantic City and Barnegat Light. The third lease area was positioned further out in the Atlantic Ocean, a region known as the New York Bight.
The project had two phases. In 2021, the New Jersey Board of Public Utilities (BPU) awarded the first phase of the project, designated as Project 1, an Offshore Renewable Energy Credit (OREC) allowance to deliver 1,510 megawatts (MW) of renewable energy into the state’s grid. This landmark achievement represented the largest single project award in New Jersey and the second-largest offshore wind project contract awarded in the United States. The full, two-phase development was planned to utilize 197 wind turbines, with a total capacity of 2.8 gigawatts (GW), capable of powering over one million NJ homes. Project 1 alone was projected to generate enough clean electricity to power more than 700,000 households, accounting for nearly 20% of the state’s residential energy needs.
How the Garden State would have benefited
The Atlantic Shores project was an energy-generation initiative and a comprehensive economic development plan. It was poised to deliver a monumental economic impact, estimated at nearly $1.9 billion in total benefits to the state, with a substantial portion guaranteed as direct local investment, totaling nearly $850 million. The project’s developers committed to a significant job creation effort, with projections for the first two phases reaching 22,290 direct full-time equivalent (FTE) jobs, 11,810 indirect FTEs, and 14,820 induced FTEs. One emphasis? Creating highly-skilled, family-sustaining union jobs, evidenced by a first-of-its-kind agreement with six New Jersey labor unions to train and hire local workers for construction and maintenance roles.
The project also included several key strategic investments designed to cement New Jersey’s role as a regional hub for the offshore wind industry. These included the development of a turbine nacelle assembly facility at the New Jersey Wind Port, a critical piece of infrastructure for a domestic supply chain. A unique partnership with South Jersey Industries was also planned for a 10 MW green hydrogen pilot project, an innovative venture intended as a stepping-stone to the broader application of green hydrogen within the state.
The project’s framework encompassed partnerships with academic institutions like Rutgers University and Rowan College, providing scholarships and funding for a Minority & Women Owned Business Incubator to foster the next generation of clean energy leaders and entrepreneurs. From an environmental perspective, Project 1 was estimated to reduce in-state net greenhouse gas emissions by approximately four million tons annually, the equivalent of taking more than 770,000 cars off the road.
The collapse of this landmark project
The decision to cancel the Atlantic Shores contract was the culmination of a series of severe economic and political setbacks that rendered the project unviable under its existing terms. The project, once seen as the most advanced in New Jersey, faced what was described as a “cascade of stumbling blocks” that ultimately led to its termination.
A confluence of economic and financial headwinds
The primary catalyst for the project’s financial difficulties? Global macroeconomic instability. The original power purchase agreement happened in a different economic climate, one that did not account for the significant inflationary pressures following the COVID-19 pandemic and the Russian invasion of Ukraine. These events contributed to a steep rise in construction costs and a global surge in interest rates, which directly increased the cost of borrowing the billions of dollars required to finance such a large-scale project.
Faced with these new economic realities, Atlantic Shores formally submitted a new bid to the New Jersey BPU, seeking to increase the price for its electricity supply to account for the escalated costs — a direct consequence of the project’s unprofitability under its original terms. But the BPU had already canceled a bid for new proposals in February, creating a regulatory impasse. The company’s request to terminate the contract reflected the mutual understanding between the developers and the state regulators that the existing conditions made the project commercially and financially unfeasible. The BPU’s decision to vacate the certificate was deemed to be in the best interest of the public, as it was clear the project could not be completed on schedule.
The weight of political and regulatory uncertainty
Concurrent with the financial pressures, the project faced significant political and regulatory headwinds, which culminated in a critical loss of investor confidence. The current administration and its supporters are opponents of offshore wind, as evidenced by President Trump’s EO and provisions in the One Big Beautiful Bill Act.
In a direct reversal of a decision made by the previous administration, the Trump administration’s Environmental Protection Agency (EPA) has proposed revoking its 2009 declaration that greenhouse gases like carbon dioxide endanger public health and welfare. The EPA plans to roll back the Clean Air Act permitting regulations. This action, which came in response to a lawsuit filed by an anti-offshore wind group, placed the project’s other permits at risk as well. The administration also implemented a broader halt on new offshore wind permits, a move that created further federal uncertainty for projects across the country.
The immediate financial consequence of political instability? In January, Shell, one of the two joint venture partners, withdrew from the project, stating that it no longer made sense from a business perspective. The company absorbed a $996 million loss in the process, signaling a loss of confidence in the project’s feasibility. EDF Renewables, the other partner, booked its own impairment of $980 million soon after.
The regulatory reversals directly contributed to a loss of investor confidence, which then had a direct and immediate effect on the balance sheets of the companies involved, amounting to nearly $2 billion in losses.
Perhaps it’s best not to view the decision to cancel the Atlantic Shores contract as a singular failure but a strategic retreat. The company has characterized the action as a “pause,” with a possibility of picking up the project in the future, should more favorable conditions arise.
A reset period for the offshore wind industry
The evidence indicates that a complex interplay of macroeconomic, political, and regulatory factors has contributed to the offshore wind industry’s struggles. The economic pressures of inflation and rising interest rates, plus political risk, have destabilized the original financial models.
Now, it’s time to “reset.” The offshore wind industry must confront its financial, supply chain, and policy vulnerabilities. The path forward requires more robust, flexible financial models that can weather global economic shifts, a more mature, resilient domestic supply chain, and a stable, predictable policy framework at the federal level.
The future success of the offshore wind industry in the U.S. depends on its ability to navigate these challenges and establish a more durable foundation for the multi-billion-dollar investments essential for achieving a clean energy transition and meeting New Jersey’s (and the nation’s) growing energy demand.
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