Biden Forges Ahead With ‘Offshore Wind Fetish’ Despite Numerous, Costly Setbacks

Written by Nick Pope on May 1, 2024. Posted in Current News

Some analysts predicted that the U.S. offshore wind industry would bounce back after a rough 2023, but many of the same problems that plagued the industry last year have continued to burden developers through the beginning of 2024. [emphasis, links added]

Energy data analytics provider Wood Mackenzie, consultants from Deloitte, Reuters, and environmental lawyers for a law firm called Locke Lord variously projected that the U.S. offshore wind sector would rebound after a distressing 2023.

However, four months into 2024, the inflation, higher borrowing costs, logistical problems, and supply-chain woes that battered the industry in 2023 have not relented, forcing developers to cancel or seek to renegotiate deals as they did in 2023.

“Obviously, providing affordable and reliable energy for everyone is a challenging endeavor,” Kevin Dayaratna, a senior research fellow for the Heritage Foundation, told the Daily Caller News Foundation. “Even despite all of the subsidies these alternative forms of energy – such as offshore wind – have received, they have still failed to become a significantly mainstream source of energy.”

Since the start of 2023, approximately 60% of all contracts signed by American offshore wind developers have been canceled, according to E&E News.

Ørsted, a Danish company and one of the world’s leading offshore wind developers, backed out of two major planned projects in New Jersey in 2023, while other players like General Electric, British Petroleum (BP), and Equinor attempted to renegotiate with state governments as economic headwinds eroded projects’ profitability.

Similar developments have played out to the start of 2024, with developers up and down the East Coast backing out of deals to sell power from their projects as the same fundamental economic problems persist despite the projections of some market experts and media outlets. …snip…

On the same day that the two attorneys published their market analysis, Equinor and BP backed out of a contract with New York state to provide power generated by their planned Empire Wind 2 offshore wind farm due to inflationary pressures. Subsequently, three other New York offshore wind projects were canceled on April 19.

“The offshore wind sector, which faced setbacks in 2023, is expected to rebound in 2024 with tangible opportunities and a record number of tenders,” Wood Mackenzie wrote on January 25. “In summary, 2024 holds the promise of a global wind energy resurgence, with key areas of focus including market recovery, reliability, profitability for [original equipment manufacturers], and the offshore wind sector’s evolving dynamics.”

The day after Wood Mackenzie published those words, Ørsted announced that it had backed out of Maryland’s orders approving its Skipjack 1 and 2 projects off the state’s coast.

The company said at the time that inflation, high refinancing costs, and supply chain issues combined to render the state’s subsidies economically unviable, but that it would not give up on the projects altogether. …snip…

The industry’s problems are also complicating President Joe Biden’s climate agenda.

The Biden administration has set a goal of having offshore wind providing enough electricity to power 10 million American homes by 2030, but Reuters reported in November 2023 that the target is almost certainly out of reach due to the industry’s struggles.

The industry has struggled despite the availability of robust federal subsidies, including tax credits contained in the Inflation Reduction Act, Biden’s signature climate bill.

Despite the industry’s missteps, the administration is pushing ahead with its offshore wind agenda, releasing a robust five-year leasing schedule for the industry on Wednesday that could see up to a dozen lease sales through 2028.

“Biden’s offshore wind fetish ignores the realities affecting the industry here and abroad, but that is the hallmark of all his energy and climate schemes,” Dan Kish, a senior research fellow at the Institute for Energy Research, told the DCNF.

“Warren Buffett once said the only reason to build wind turbines is the tax credits, and he was talking about onshore wind. Offshore wind is three times as expensive, and it only makes sense with sweetheart electric rates for the builders gifted to them by politicians looking for golden parachute jobs with wind companies after consumers boot them out of office when they start getting their bills.”

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