Ørsted leaders pledge to uphold commitment to New London
New London — A day after announcing the $510 million purchase of Deepwater Wind, Ørsted leaders pledged to uphold commitments to upgrade New London's State Pier and help the region play a leading role in an offshore wind industry primed for growth along the East Coast.
"We think you need to have a couple of hubs, in the Northeast and the mid-Atlantic," Thomas Brostrøm, CEO of Ørsted US Offshore Wind, said in an interview Tuesday. "We certainly think New London is very well positioned. For us to take this step and make an acquisition is a sign of the market along the Eastern Seaboard."
Brostrøm noted that seven states have committed to build more than 10 gigawatts of offshore wind capacity by 2030. With such expansion in the works and the Bureau of Ocean Energy Management looking to lease more swaths of federal waters to developers, Denmark-based Ørsted says the acquisition of the Providence-based Deepwater Wind and a pitch to run the New London State Pier are timely moves that will lead to long-term commitments.
Ørsted confirmed on Tuesday that Bay State Wind, its joint venture with Eversource, has teamed up with New Haven-based Gateway Terminal to submit a proposal to operate State Pier, which already is slated for $30 million worth of upgrades split between Deepwater Wind and the state.
The Connecticut Port Authority's review of proposals remains ongoing. Messages left with port officials were not immediately returned.
"We are a company that has brought the supply chain to many countries in many areas of the world," Brostrøm said, noting industry and manufacturing being closer to deployment and staging areas cuts transportation costs while boosting local economies.
Francis Slingsby, Ørsted's head of strategic partnerships in North America, said the company was the "anchor tenant for the renovation of Belfast Harbour," which handled hundreds of thousands of tons of wind farm components and served as a pre-assembly port for Ørsted's Walney Extension offshore wind farm.
"That was really a good template for what we believe could conceivably happen in New London," Slingsby said. He cited New London's geographical advantages, solid local industries and a skilled workforce as vital assets inspiring Ørsted to push for a "long-term commitment bringing our experience and ability" to create an offshore wind terminal in the city.
Owned by investment firm D.E. Shaw pending the acquisition's closing, Deepwater Wind built the nation's first offshore wind farm off Block Island. Three Deepwater Wind offshore wind projects are in the works for Rhode Island and Connecticut, Maryland and New York.
The state picked Deepwater Wind to deliver 200 megawatts to Connecticut from its 75-turbine Revolution Wind project in federal waters south of Martha's Vineyard. Its proposal included a $15 million sweetener to help upgrade State Pier to ready the port for substation construction and secondary steel fabrication.
Deepwater Wind CEO Jeffrey Grybowski said those commitments remain intact following the acquisition, allowing "major aspects of the wind farm to be built locally."
From 'black to green'
Ørsted's U.S. portfolio includes partnerships with Eversource, New Jersey utility PSE&G and Virginia-based Dominion Energy.
In Connecticut's recent zero-carbon electricity auction, Ørsted proposed to deliver enough electricity to power 450,000 Connecticut homes from an offshore wind farm south of Martha's Vineyard. The proposal included a $25 million fund to spur growth in the local economy and to support skills training and environmental stewardship programs. The company previously lost out to proposals from New Bedford-based Vineyard Wind and Deepwater Wind for contracts in Massachusetts and Connecticut, respectively.
Formerly Danish Oil and Natural Gas, Ørsted is the world's largest offshore wind developer. Brostrøm said the company in recent years sold off its oil and gas business and is converting its last coal-fired plant into a biomass plant in Denmark.
"Over the last 10 years we have transitioned ourselves from being a black energy company to being entirely green," he said.
The company sold off its onshore wind business several years ago but re-entered the American market in a big way this summer, spending almost $600 million in August to buy onshore wind developer Lincoln Clean Energy.
"We are very busy these days," Brostrøm said, noting the move to acquire Lincoln Clean Energy came when onshore wind costs were down and when the company hoped to become less dependent on the offshore wind market.
Mayor Michael Passero said city officials have been torn between Deepwater Wind and Ørsted-Eversource's Bay State Wind. Officials liked that Deepwater Wind planned to open an office in New London and perform construction here, but Ørsted's experience with port expansion also was appealing, Passero said.
"The acquisition solved an immediate problem for us," he said. "Ørsted has built out ports in Europe and transformed them into world-class ports in connection to their development of offshore wind, which is years ahead of us. Ørsted is presenting something that looks like it's great for the future of the city. Now we're able to move forward with both these great partners."
The city and Deepwater Wind are negotiating a host community agreement, essentially a two-year financial commitment that has not yet been finalized, Passero said.
Felix Reyes, the city's director of development and planning, said conversations with Ørsted have been "very positive, with great interest in New London being their home hub for future development."
But Reyes urged local and state officials to focus on the potential long-term economic impact on New London, especially considering successful ports already exist in Rhode Island, New York and New Jersey.
"We can't assume this merger means more things for the city," Reyes said. "We have to work closely with Ørsted and Deepwater Wind to understand what are the true commitments, what are the jobs we are talking about."
Reyes hopes Ørsted follows through on its push for supply-chain development in the region, utilizing the Thames River and rail lines "to create some industry" that also could benefit Montville, Norwich and other communities.
Environmental and labor groups this week applauded the acquisition.
Catherine Bowes, the National Wildlife Federation's offshore wind program director, said the move "comes at a pivotal moment in America's offshore wind story."
"We know responsibly developed offshore wind power offers a critical solution to climate change, and the first round of U.S. projects must be sited and built with wildlife in mind," she said, adding that the Block Island Wind Farm set a strong precedent.
John Humphries of the Connecticut Roundtable on Climate and Jobs called the acquisition "good news for the state and the region."
"We anticipate ... even more significant investments in New London's harbor infrastructure than Deepwater Wind's initial commitment," he said. "That's good news for Connecticut's workers and their communities. And as the industry continues to expand, the cost of producing and delivering this new source of clean energy will continue to come down, which will be further good news for Connecticut's ratepayers and for the climate."
Department of Energy and Environmental Protection spokesman Chris Collibee said his agency still was evaluating the merger but did not expect any significant impact on the zero-carbon auction. DEEP expects to select winning proposals from low-emitting and zero-carbon energy producers including wind, solar and nuclear facilities by the end of the year. Pricing information and other details have been redacted in the proposals to the state. Successful energy producers will hammer out contracts with utilities after DEEP makes its selections.