Offshore wind foes sue New Jersey and Danish turbine developer over tax break

Opponents of offshore wind projects are suing New Jersey and the Danish wind energy developer Orsted over a lucrative tax break the state approved for the company, saying it is illegal because the law was written to benefit only one entity.

The lawsuit was filed Thursday by two residents' groups that are opposed to offshore wind projects and three electricity customers from Ocean City who seek to overturn the law. They say it gives Orsted about $1 billion in tax relief for one of the two windmill projects it plans to build off the state's southern coast.

The state Legislature passed a bill allowing Orsted to keep federal tax credits that it was obligated to pass along to ratepayers. In applying for permission to build the project, called Ocean Wind I, Orsted had promised to return such credits to customers.

Lawmakers who narrowly approved the bill 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,” Democratic Gov. Phil Murphy said after signing the bill on July 6. “Either we get this bill done and the industry thrives here, and the jobs that are associated with it, or it goes somewhere else.”

Bruce Afran, a lawyer representing two groups who brought the lawsuit — Protect Our Coast NJ and Defend Brigantine Beach — said the state is not permitted to enact laws that benefit only one party.

“The Legislature’s giveaway of federal tax credits to Orsted benefits a single company in violation of the New Jersey Constitution,” he said. “In New Jersey, laws that favor a single private party are generally unconstitutional."

Neither the governor's office nor Orsted immediately commented Friday on the lawsuit, which was filed in state Superior Court in Mercer County.

Almost immediately after the tax break for Orsted was approved, another company that also has approval for an offshore wind project in New Jersey said it, too, wants a tax break.

Atlantic Shores said it 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.

In a letter to lawmakers before the bill was approved, a state office representing the interests of utility customers said the bill would boost Orsted's profits “and will result in higher prices being paid by ratepayers.”