Instead of delivering emissions reductions to mitigate the impacts of climate change, the rush towards electrification has brought bankruptcy and bailouts. Across the country, developers and manufacturers are struggling to keep pace with lofty timelines; instead committing to promises and projects that later end in disappointment and litigation.
It’s clear that the current pace to adopt clean energy in New Jersey and beyond is incompatible with today’s infrastructure and economic realities. While the impacts of climate change pose a real threat that should be addressed, states need to adopt a real approach to electrification — or face unintended consequences.
The growing electric vehicle industry is becoming increasingly familiar with these consequences.
Just over two years after President Biden lauded electric bus company Proterra’s manufacturing initiatives, Proterra filed for Chapter 11 reorganization in federal court in Delaware. The California-based company has existed for nearly two decades and recently celebrated electric vehicle battery production in South Carolina, as well as the opening of North America’s largest electric vehicle bus charging center.
Despite what seemed like major milestones in a nationwide electric vehicle adoption effort, Proterra ultimately was unable to overcome “market and macroeconomic headwinds.” Unfortunately Proterra is not alone in their financial struggles.
Just weeks before Proterra’s bankruptcy filing, EV startup Lordstown Motors also filed for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. Production of Lordstown’s Endurance electric truck faced a myriad of development obstacles since the company went public in 2020, including economic troubles requiring a $100+ million investment by Taiwanese manufacturer Foxconn. Even with the intervention, Lordstown was forced to halt Endurance production.
As New Jersey looks to incentivize light-duty electric vehicle sales with a forthcoming administrative rule, we hope that electric vehicle adoption in the state does not subject manufacturers to a similar fate.
The struggles of adapting to electrification are not limited to onshore industries. Across the Northeast, offshore energy goals are encountering hard financial realities.
In Massachusetts, offshore wind developer Avangrid is paying $48 million to terminate its Commonwealth Wind project — approved by the Department of Public Utilities just months ago. Similar agreements are forthcoming in Massachusetts, with Shell and Ocean Winds North America expected to reach an even higher termination payment. Just two days after Avangrid announced its settlement, Rhode Island’s largest utility announced it was scrapping plans for a power purchase agreement with Ørsted and Eversource; rejecting the only bid received in its October 2022 Request for Proposals.
And these problems are all too familiar in New Jersey. While Governor Murphy has hailed New Jersey as a leader in the country’s offshore wind development and aims to transition the state to 100% clean energy by 2035, making such statements a reality has faced delays, lawsuits and funding shortfalls.
The most recent development in New Jersey’s offshore wind saga comes after a legislative resuscitation of Ørsted’s Ocean Wind I project, when Governor Murphy signed a bill allowing Danish developer Ørsted to keep new federal tax incentives at the expense of New Jersey ratepayers.
New Jersey’s second major offshore wind project is now also looking to state leaders for a similar government-funded break. Shortly after Ørsted’s project approval, Atlantic Shores issued a statement suggesting their previously approved project is in jeopardy without “immediate action” and further financial aid.
Lawmakers are also calling the transparency of the state’s clean energy approach into question, urging the Board of Public Utilities to do more to address unanswered questions and concerns surrounding the impacts of offshore wind on ratepayers and tourism. UTCA and our members stand ready to provide the support to deliver energy from offshore wind to New Jersey. Until then, we hope that New Jersey’s approach to this growing industry is well thought out.
While the fate, timeline and cost of New Jersey’s offshore wind projects seems to hang in the balance, one thing remains clear — ambitions are outpacing economic reality. New Jersey continues to propose clean energy initiatives that fail to account for industry capabilities.
The unforeseen consequences of this rush to electrification are not exclusive to any industry, business or entity. Without an approach that most effectively balances our clean energy needs with currently available realities, we may all pay the price.
Dave Rible is the executive director of the Utility and Transportation Contractors Association of New Jersey.