November 3, 2023 — Danish energy developer Orsted A/S declared Tuesday that it and Eversource Energy LLC are committed to the 704-megawatt Revolution Wind project off the coast of Rhode Island, a “final investment decision” that came the same day Orsted scrapped two large offshore wind projects off the coast of New Jersey.
‘Planet Money’: Why offshore wind is facing headwinds
November 3, 2023 — The Gulf of Mexico this summer saw the first-ever opening of an auction of leases for offshore wind production. But the expectations for robust bidding haven’t been realized.
The Biden administration this week announced what it called the largest offshore wind project in the nation. The government says the opening of a fifth offshore wind operation, this one off the Virginia coast, comes with the potential to power 900,000 homes. But the wind appears to have gone out of the sails for this summer’s inaugural round of bidding for wind leases in the Gulf of Mexico. Our colleagues over at The Indicator From Planet Money, Wailin Wong and Darian Woods, looked into why.
DARIAN WOODS, BYLINE: So this year, in the late summer, Mike Celata was in his New Orleans office early. While there was a hurricane that happened to be brewing in the Gulf of Mexico, Mike was fixated on his screen for another big event for the Gulf.
WAILIN WONG, BYLINE: Mike had helped set up the first ever auction for offshore wind farms in the region. He works for the Bureau of Ocean Energy Management. That’s a government agency that manages how the sea owned by the government is used for things like drilling oil or gas.
MIKE CELATA: It was a lot of anticipation. We were just waiting to see what those first bids would be. A lot of excitement.
WONG: This auction could mean pretty high bids. A similar patch of ocean near New York had gone for over $1 billion.
WOODS: But the sea patches did not go for anywhere near $1 billion. One of the three sites sold for 5.5 million. And two didn’t even get any offers.
MARK REPSHER: It was a little deflating.
WOODS: Mark Repsher, a partner at PA Consulting, which is a clean energy advisory that worked with some of the energy companies that were considering bidding for the auction.
WONG: Mark says there are some downsides to the area. If you think about what other kinds of electricity you could generate in the region, like in Texas, there are cheaper options than to drill giant windmills into the Gulf floor, like solar power.
As industry struggles, federal, state offshore wind goals could get tougher to meet
November 3, 2023 — Good news or bad news first? Because there was plenty of both this week for the fledgling U.S. offshore wind industry.
On Halloween, the Biden administration announced that the nation’s largest planned offshore wind development, Dominion Energy’s 2,600 megawatt Coastal Virginia Offshore Wind project, received its last major federal approval.
The same day, however, Danish wind giant Ørsted pulled the plug on a pair of projects (Ocean Wind 1 and 2) that were planned off the coast of New Jersey, citing climbing interest rates, inflation and “supply chain bottlenecks.” The news touched off a firestorm in New Jersey, which has set some of the most aggressive offshore wind goals in the country and gone to considerable lengths to plan the transmission upgrades needed to bring all that power ashore.
The same financial headwinds have many U.S.offshore wind developers looking to renegotiate deals as the costs of their projects climb. And it’s casting some doubt on whether states and the Biden administration will be able to hit their offshore wind targets on time.
Offshore Wind Firm Cancels N.J. Projects, as Industry’s Prospects Dim
November 2, 2023 — Plans to build two wind farms off the coast of New Jersey were scrapped, the company behind them said on Wednesday, a blow to the state’s efforts to cut greenhouse gas emissions and the latest shakeout in the U.S. wind industry.
The move, which will force Orsted, a Danish company, to write off as much as $5.6 billion, will crimp the Biden administration’s plans to make the wind industry a critical component of plans to reduce greenhouse gas emissions. High inflation and soaring interest rates are making planned projects that looked like winners several years ago no longer profitable.
“The world has in many ways, from a macroeconomic and industry point of view, turned upside down,” Mads Nipper, Orsted’s chief executive, said on a call with reporters on Wednesday.
The two projects, known as Ocean Wind 1 and 2, were destined to provide green energy to New Jersey. They were strongly backed by the state’s governor, Phil Murphy, a Democrat with national ambitions who stresses his environmental credentials but who has lately drawn scorn for falling short in combating climate change. On Wednesday he suggested that Orsted was a dishonest broker and insisted that the “future of offshore wind” along the state’s 130-mile coastline remained strong.
Mr. Nipper said Orsted thought that losses on the New Jersey projects would rise over time, so “the only sensible thing is to draw a line in the sand.”
Overall, the Biden administration wants to install 30 gigawatts of wind power in the United States by 2030, and officials in New Jersey had been aiming to produce 11 gigawatts by 2040.
Offshore wind company cancels project in N.J. Now what?
October 2, 2023 — Danish global offshore wind developer Orsted’s abrupt announcement this week that it is abandoning both of its massive projects planned off the New Jersey coast is a stinging blow to Gov. Phil Murphy’s ambitious goal of addressing climate change that threatens the state’s coast.
The company’s announcement Tuesday night was akin to abruptly snatching away key pieces of the state’s renewable energy puzzle. As of Wednesday, it was unclear how leaders would fill that void.
However, one key piece does remain in place: Atlantic Shores, the largest single wind farm yet approved by the New Jersey Board of Public Utilities (BPU).
Orsted in its earnings statement cited economic headwinds as the reason.
“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” said David Hardy, group executive vice president and CEO Americas at Orsted. “As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2.”
Hardy said the company was disappointed and thanked Murphy and other state leaders who tried to kick-start the industry in the state, hoping to make it a hub for offshore wind in the Northeast.
‘Outrageous’
Murphy, however, was having none of it. His administration took significant political heat in backing recent legislation allowing Orsted to take federal renewable energy credits that initially state law allowed to go only to ratepayers.
“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” the governor said in a statement. “As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.”
Murphy said his administration is looking “to review all legal rights and remedies and to take all necessary steps to ensure that Orsted fully and immediately honors its obligations.”
State officials who backed offshore wind are “upset, frustrated, and disappointed,” said a senior administration official, who called Orsted’s decision a “setback” in the state’s aggressive goal of obtaining 100% clean energy by 2035. The official said the administration is proceeding with offshore wind because “it’s too important to our economic future. It’s too important for our environmental and energy needs.”
It could take time for the state to find, and approve, a new developer to replace the 2.2 gigawatts of energy that would have been generated by Orsted’s Ocean Wind 1 and 2 projects — enough to have powered about 1 million homes.
Offshore wind is stumbling. Can Biden save the industry?
November 2, 2023 — The Biden administration is facing increasing pressure to take action to bolster the offshore wind industry after a major project was canceled in New Jersey on Tuesday, although options appear limited to ease financial hurdles facing developers.
So far, the administration is reiterating that the industry will continue to grow and that President Joe Biden’s goals for 30 gigawatts of offshore wind by 2030 will be achieved, even as many states and analysts say otherwise.
“Biden’s offshore wind goals look impossible at this point of time,” said Chelsea Jean-Michel, a wind analyst with BloombergNEF, a research and analysis firm.
NEW JERSEY: Ørsted pulls plug on New Jersey offshore wind projects
November 2, 2023 — New Jersey’s leaders are blasting a decision by a Danish energy company to back away from two major offshore wind projects off the state’s coastline.
In a statement issued Tuesday, Ørsted announced that it is scrapping two large offshore wind power projects off the coast of New Jersey, delivering a major blow to the state’s clean energy plans and Gov. Phil Murphy’s push to put the coastal state at the forefront of the nation’s nascent offshore wind industry.
Murphy ripped the company’s decision to walk away from the projects, calling it “outrageous” and saying it “calls into question the company’s credibility and competence.”
“As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project,” he said.
Murphy said a provision of the company’s development agreement requires it to pay New Jersey $300 million to support the offshore wind sector if the projects don’t proceed.
“I have directed my administration to review all legal rights and remedies and to take all necessary steps to ensure that Orsted fully and immediately honors its obligations,” he said.
U.S. offshore wind sector ‘fundamentally broken’ – BP exec
November 1, 2023 — BP’s renewables boss said on Wednesday the U.S. offshore wind industry is “fundamentally broken” as BP and its partner Equinor (EQNR.OL) study options to develop huge projects off the coast of New York after writing down $840 million of their value.
The offshore wind industry, one of the fastest growing energy sectors, has recently suffered a string of major setbacks due to equipment reliability issues, supply chain problems and sharp cost increases.
Orsted (ORSTED.CO), the world’s largest offshore wind developer, on Wednesday flagged writedowns of up to $5.6 billion after halting the development of U.S. offshore wind projects.
Anja-Isabel Dotzenrath, BP’s head of gas and low carbon, said that problems in the United States included permitting, the time lag between signing power purchase agreements and projects being built and a lack of inflationary adjustment mechanisms
America’s Offshore Wind Ambitions Are Coming With Bigger Price Tags
November 1, 2023 — Soaring costs are pushing up the price of big wind-power projects, challenging the country’s shift to renewable energy and potentially leading to larger-than-expected bills for residents.
New York state officials in recent days unveiled a slate of wind-farm proposals that would result in higher electricity rates for residents than previously approved plans. That has firms behind older bids rushing to see if they can resubmit their plans at or near the new rate.
The projects are among the country’s biggest and are being closely watched because they show how a nascent industry that is key to the U.S. energy transition will work through the upheaval of escalating costs. The struggles are threatening delays in the current pipeline of projects, which analysts say could hamper the Biden administration’s offshore wind ambitions.
Orsted hit by up to $5.6 billion impairment on halted US projects
November 1, 2023 — Renewable energy firm Orsted (ORSTED.CO) on Wednesday halted the development of two U.S. offshore wind projects and said related impairments had surged above $5 billion, as the industry grapples with supply chain delays and higher costs.
Orsted, the world’s largest offshore wind developer, said it would stop developing its 2,248-megawatt (MW) Ocean Wind 1 and 2 projects in New Jersey. Related impairments could amount to as much as 39.4 billion Danish crowns ($5.58 billion).
Its stock plunged as much as 22% to a six year low of 265 crowns.
The offshore wind industry has found itself in a perfect storm of rising inflation, interest rate hikes and supply chain delays, casting doubt on plans by U.S. President Joe Biden and several states to use offshore wind to replace fossil fuels in energy production to fight climate change.
On Tuesday, energy major BP (BP.L) booked a third-quarter writedown of $540 million on wind projects after officials in New York state rejected a request for better terms to reflect what BP called “inflationary pressures and permitting delays”.
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