Together, the abandoned projects were slated to generate over 2.2 gigawatts of power, constituting nearly one-fifth of Biden’s 30 gigawatt offshore wind power goal for 2030.
Danish wind energy producer Ørsted recently announced the cancelation of its Ocean Wind I and II projects off southern New Jersey, dealing a blow to the rapidly growing offshore wind industry in the United States.
This decision represents a significant setback to the Biden administration’s ambitious goals of supplying 10 million homes with electricity from towering ocean-based turbines by 2030 and achieving a carbon-free electric grid five years later. It is attributed to supply chain difficulties, higher interest rates, and a lack of desired tax credits.
Together, the abandoned projects were slated to generate over 2.2 gigawatts of power, constituting nearly one-fifth of President Joe Biden’s 30 gigawatt offshore wind power goal for 2030.
This development comes on the heels of New England developers scrapping power contracts for three projects destined to provide an additional 3.2 gigawatts of wind power to Massachusetts and Connecticut, citing financial impracticality.
Despite these setbacks, the White House maintains that offshore wind energy is still advancing. Notably, New York state has recently made substantial investments, and the Interior Department has greenlit the nation’s largest planned offshore wind farm in Virginia. Additionally, the Bureau of Ocean Energy Management has identified new offshore wind lease areas in the Gulf of Mexico.
ClearView Energy Partners, a research firm, suggests that while the U.S. may not reach the 30-gigawatt target by 2030, achieving 20 to 22 gigawatts or more remains feasible. Currently, the nation’s offshore wind capacity is minimal, with just two small demonstration projects providing a fraction of a single gigawatt of power.
Offshore wind farms are pivotal in the government’s push toward renewable energy, particularly in populous East Coast states where land for traditional wind or solar installations is limited. Eight East Coast states have established offshore wind mandates, committing to over 45 gigawatts of combined capacity.
Industry experts acknowledge the challenges posed by global economic factors, including inflation, supply chain disruptions, and escalating capital and material costs. Ørsted, for instance, is writing off $4 billion, primarily due to the cancellation of the New Jersey projects.
David Hardy, CEO Americas at Ørsted, emphasizes the importance of reducing the cost of offshore wind in the U.S. to ensure affordability while pursuing clean energy goals. He acknowledges the need to navigate a learning curve akin to Europe’s, with initial higher costs and a more measured pace.
While Ørsted’s announcement is viewed as a setback, it is not considered a fatal blow to the industry. The Biden administration recently approved the Coastal Virginia Offshore Wind project, a 2.6 gigawatt venture set to power 900,000 homes.
The current outlook, according to S&P Global Commodity Insights, predicts 22 gigawatts of offshore wind capacity by 2030, though this may be subject to revision in light of recent industry developments.
Environmental advocates stress the urgency of bringing offshore wind projects online to expedite the transition away from fossil fuel-powered plants, ultimately improving air quality.
Despite Ørsted’s decision, New Jersey remains committed to advancing offshore wind initiatives, aligning with its ambitious clean energy targets set by Governor Phil Murphy.
Construction of the first U.S. commercial-scale offshore wind farms, Vineyard Wind off Massachusetts and South Fork Wind off Rhode Island and New York, is currently underway.