Whether it’s an impulse buy on Amazon or one too many Proseccos at the company Christmas party, we all have regrets. But generally speaking, it’s best avoid having five billion of them at once.
Background: Last week, Ørsted A/S, a world leader in offshore wind power development, axed two major offshore wind projects in New Jersey. All in all, the company will have related write-downs totaling more than $5 billion.
Digging in: The Danish energy developer tapped macroeconomic factors, including as high inflation, rising interest rates, and supply chain hangups as the triggers for the decision.
In a similar move, BP plc and Norway-based Equinor began a similar retreat from their joint Empire and Beacon offshore wind projects to cap off the most dramatic week for the Jersey Shore since Jersey Shore.
TLDR: US offshore wind development is in shambles, with one BP executive referring to the sector as “fundamentally broken”.
Meanwhile, in Washington
The recent project cancellations are a cause for concern for US President Joe Biden, as the four projects made up about 20 percent of the administration’s goal for 30 gigawatts of offshore wind infrastructure by 2030.
Altogether, it’s estimated that as much as 30 percent of state-procured offshore wind projects have been cancelled so far.
- Biden maintains that US offshore wind will continue to expand despite the Ørsted news with nearly $8 billion in offshore wind investment taking root since the inception of the Inflation Reduction Act.
Zoom out: Offshore wind in the U.S. is working about as well as a McDonald’s soft-serve machine. But with the Biden administration keen on making good on net-zero emissions promises, experts think that the mass exodus of wind energy producers will prompt the fundamental policy changes needed to make offshore wind more lucrative for producers.