Blowing in the wind.The US offshore wind industry is in shambles after Denmark’s largest energy company scrapped a pair of multi-billion dollar wind farms off the coast of New Jersey.And observers say the centrepiece of US President Joe Biden’s ‘wind revolution’ is in shambles despite hundreds of billions of dollars in incentives and subsidies for so-called ‘clean energy.’After weeks of speculation, Fredericia-based Ørsted on Tuesday cancelled the Ocean Wind 1 and 2 projects off Atlantic City and took a USD$4-billion write down on the assets..“There’s no doubt that the global offshore wind industry, not only in the US, is finding itself in a perfect storm.”Ørsted CEO Mads Nipper.The losses were almost double the $2.3 billion analysts had been expecting in August when the company complained the projects weren’t viable despite massive federal and state subsidies that potentially could have provided up to 30% in tax breaks.In a statement, the company cited its inability to reach a settlement with the New Jersey government on subsidies paid by ratepayers — along with supply chain issues and higher interest rates — as the cause.It also said talks with the federal government to secure more subsidies under Biden’s signature Inflation Reduction Act had also stalled. “Based on the challenged US portfolio and the current market conditions, we’ve initiated numerous actions to ensure our capital structure and rating and to improve our competitiveness and value creation,” CEO Mads Nipper said in a statement. The company’s Copenhagen-listed shares immediately dropped more than 22% on the news and are down by more than half in the past year alone..At least four more massive projects off Rhode Island, Maryland and New York State remain in jeopardy. Each are 50/50 joint ventures with local utility providers.Nipper suggested the 966 megawatt Skipjack project off Delaware may also face cancellation. The massive turbines are almost three times the height of the Stature of Liberty.The Ocean Wind projects were announced to much fanfare in 2021 as part of New Jersey’s emissions reduction goals. At the time the White House called it “Bidenomics in action.” The US president has targeted up to 30 gigawatts of offshore power — the most ambitious in the world — but to date just two small pilot projects are in operation.It comes as other major wind developers have taken massive hits on future plans. This week BP and Norway’s Equinor took combined hits of $840 million related to three offshore wind projects in the US after they failed to renegotiate price contracts with the New York Public Service Commission.That prompted a top BP executive to call the US offshore wind industry “fundamentally broken.”“Equinor and BP are assessing the impact of the decision on these projects and future development plans,” BP said in its third quarter earnings report on Tuesday..It comes as Canada struggles with its own offshore wind plans. On Tuesday the Nova Scotia government announced two potential sites for up to a gigawatt of capacity, about half of the province’s present power production which comes from coal.It comes after the federal government and the Maritime provinces agreed in June to amend the Atlantic Accords to regulate offshore wind.Earlier in October the Public Policy Forum criticized the Canadian government for moving too slow on offshore wind.“Canada needs to turn its inexhaustible wind resource into infinitely renewable electricity,” it said. “That will require a new level of ambition, even audacity.”
Blowing in the wind.The US offshore wind industry is in shambles after Denmark’s largest energy company scrapped a pair of multi-billion dollar wind farms off the coast of New Jersey.And observers say the centrepiece of US President Joe Biden’s ‘wind revolution’ is in shambles despite hundreds of billions of dollars in incentives and subsidies for so-called ‘clean energy.’After weeks of speculation, Fredericia-based Ørsted on Tuesday cancelled the Ocean Wind 1 and 2 projects off Atlantic City and took a USD$4-billion write down on the assets..“There’s no doubt that the global offshore wind industry, not only in the US, is finding itself in a perfect storm.”Ørsted CEO Mads Nipper.The losses were almost double the $2.3 billion analysts had been expecting in August when the company complained the projects weren’t viable despite massive federal and state subsidies that potentially could have provided up to 30% in tax breaks.In a statement, the company cited its inability to reach a settlement with the New Jersey government on subsidies paid by ratepayers — along with supply chain issues and higher interest rates — as the cause.It also said talks with the federal government to secure more subsidies under Biden’s signature Inflation Reduction Act had also stalled. “Based on the challenged US portfolio and the current market conditions, we’ve initiated numerous actions to ensure our capital structure and rating and to improve our competitiveness and value creation,” CEO Mads Nipper said in a statement. The company’s Copenhagen-listed shares immediately dropped more than 22% on the news and are down by more than half in the past year alone..At least four more massive projects off Rhode Island, Maryland and New York State remain in jeopardy. Each are 50/50 joint ventures with local utility providers.Nipper suggested the 966 megawatt Skipjack project off Delaware may also face cancellation. The massive turbines are almost three times the height of the Stature of Liberty.The Ocean Wind projects were announced to much fanfare in 2021 as part of New Jersey’s emissions reduction goals. At the time the White House called it “Bidenomics in action.” The US president has targeted up to 30 gigawatts of offshore power — the most ambitious in the world — but to date just two small pilot projects are in operation.It comes as other major wind developers have taken massive hits on future plans. This week BP and Norway’s Equinor took combined hits of $840 million related to three offshore wind projects in the US after they failed to renegotiate price contracts with the New York Public Service Commission.That prompted a top BP executive to call the US offshore wind industry “fundamentally broken.”“Equinor and BP are assessing the impact of the decision on these projects and future development plans,” BP said in its third quarter earnings report on Tuesday..It comes as Canada struggles with its own offshore wind plans. On Tuesday the Nova Scotia government announced two potential sites for up to a gigawatt of capacity, about half of the province’s present power production which comes from coal.It comes after the federal government and the Maritime provinces agreed in June to amend the Atlantic Accords to regulate offshore wind.Earlier in October the Public Policy Forum criticized the Canadian government for moving too slow on offshore wind.“Canada needs to turn its inexhaustible wind resource into infinitely renewable electricity,” it said. “That will require a new level of ambition, even audacity.”
