CONTRIBUTOR
A major offshore wind developer announced Thursday that it withdrew from a deal with a state utility regulator for two offshore wind projects, citing inflation and other economic pressures.
Ørsted, a key corporate player in the Biden administration’s offshore wind agenda, has backed out of the Maryland Public Service Commission’s (MPSC) orders approving the company’s Skipjack 1 and 2 projects off the Maryland coast, the company announced Thursday. The company said that inflationary pressure, high borrowing costs and supply chain problems have combined to make the state’s subsidies economically unviable, but that it is not yet abandoning the projects and will continue to pursue permits, according to a regulatory filing with the MPSC.
“Today’s announcement affirms our commitment to developing value creating projects and represents an opportunity to reposition Skipjack Wind, located in a strategically valuable federal lease area and with a state that’s highly supportive of offshore wind, for future offtake opportunities,” David Hardy, the executive vice president and CEO of region Americas at Ørsted, said in a Thursday statement. “As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available. We’ll continue to advance Skipjack Wind’s development milestones, including its construction and operations plan.” (RELATED: Blue State Doubles Down On Offshore Wind After 2023’s Massive Failure)
“The statutorily-mandated caps on the residential ratepayer impacts have very little room left,” an MPSC spokesperson told the Daily Caller News Foundation. The state cannot raise those caps in the absence of legislative action, the spokesperson added.
The withdrawal is the latest sign of trouble for Ørsted, which pulled the plug on two major projects off the New Jersey coast in October 2o23 after many of the same underlying factors made those projects untenable. At one point, the company appeared poised to become a major beneficiary of the Inflation Reduction Act (IRA), President Joe Biden’s signature climate bill, but the mounting macroeconomic problems that have beleaguered the economy through his first term have weighed heavily on the company.
“Yesterday’s news from Ørsted is disappointing — the Skipjack project was an important component in advancing Maryland’s clean energy goals,” MPSC Chair Frederick Hoover said of the withdrawal. “However, the Commission remains optimistic about the future of the offshore wind industry in Maryland, and would note that the US Wind project continues to move through the federal approval process.”
he withdrawal is the latest sign of distress for the Biden administration’s offshore wind goals, especially if it turns out to be a precursor for the eventual collapse of the company’s Maryland projects. The White House is aiming for offshore wind to produce enough electricity to power more than 10 million American homes by 2030, but that goal now appears to be firmly out of reach, according to Reuters.
Neither Ørsted nor the White House responded immediately to requests for comment.
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“”inflationary pressure, high borrowing costs and supply chain problems””
I’ve heard that somewhere before…
…government officials had not fully grasped the scale of the cost increases faced by offshore wind developers
https://www.theguardian.com/environment/2023/sep/08/what-went-wrong-at-uk-governments-offshore-wind-auction
It really is that cheap. / sarc
Even Hypercostly Megawind can’t get a foothold in times of Bidenflation.
Production and transportation costs are skyrocketing due to the cost of free energy renewables.
Why can’t contractors simply bid on building the wind farms for an operator and walk away with their profits? It is a stupid arrangement to have the builders have to make their profits on the sale of power. Are building contractors necessarily the best operators? Are they not likely likely to make suboptimal choices to maximize their profits and make marginal amounts of power that would be better drawn from gasfired ‘backup’?
The offshore wind industry is just passing through a price spike. The only question is will the states pay the new high prices. New Jersey just agreed to. Others are likely to because they love offshore wind.
Federal guaranteed low interest loans that everyone knows will only be repaid for a short while are a convenient solution to save the green ‘opportunity” to help save the planet from plant food. That won’t increase electric rates it will increase national debt and the cost is spread over the entire US in the form of inflation. When we’re increasing the National Debt by $trillions every year, what’s a couple hundred $billion more, right? We are so screwed.
To my knowledge the offshore wind developers are not getting any federal loans. They are getting huge subsidies from both the Feds and the states.
No fed loan yet.
The “ongoing approval process” will ensure that rate payers are not damaged by this Project that provides needed security of energy supply for the benefit of all Americans. I can hear Biden’s announcement already at the appropriate time before the election (it makes my ears ring).
Isn’t the irony palpable???
Inflation is dampening a company intended to be a beneficiary of the extremely misnamed Inflation Reduction Act.
Definitely not intended to reduce inflation
Inflation Inflaming Act
Inflation Creation Act
Unfortunately, ratepayers are also taxpayers, so there is no escape from the higher costs.
Do they love offshore wind or the idea of it?
There are just two operational projects with a total generating capacity 42 MW. There are 20,000 MW in the planning stages off the US east coast but most seem to be stuck in the surveying and planning stages.
https://en.wikipedia.org/wiki/List_of_offshore_wind_farms_in_the_United_States
It’s a bluff. They know with the current administration they’ll get more $$.
They are dealing with the states not the Feds. Generation is a State authority. But yes the Atlantic coast states are very green. They mostly love offshore wind.
By now they’re mostly sick of solar “farms” so they think they can arrive at net zero nirvana with just wind which of course is stupid.
I kind of doubt that the coastal resort towns (like Ocean City, Maryland) will love having dead whales wash up on their beaches – especially during the summer months!
They could repurpose as a societal benefit. Huge whale barbecues, everyone invited, with fireworks.
Yes “they” are dealing with the States, but the States are dealing with the federal government that will make these Projects go regardless of cost unless the Republican House can stop it (provided they even try).
Yep: worked in the UK (currently changing its name to Useless Kingdom).
“combined to make the state’s subsidies economically unviable.”
Nuff said. Mo subsidy, pulleze.
Which just goes to show that off-shore windmills are not economically viable without Lots of taxpayer money.
…just like onshore windmills.
Yes, won’t onshore projects with 20 year contracts be vulnerable to the same inflationary pressure, high borrowing costs and supply chain problems with maintenance and management, thus making subsidizing these projects economically unviable?
Will politicians be able to continue to pass on these costs to the ratepayers?
I live in Maryland.
Here is a recent opening statement from a blurb recently;
The Maryland Public Service Commission unanimously authorized Baltimore Gas and Electric’s multi-year rate plan Thursday.
The plan features a rate increase over three years worth just under $408 million.
The commission voted on it! It is not really a rate increase. It is an increase in what BGE charges for delivery of both gas and electric service (infrastructure). One year we had a warm winter and gas sales were way down, so the commission allowed BGE to charge more for the delivery service that year.
But, the good news in noted in the article above;
“The statutorily-mandated caps on the residential ratepayer impacts have very little room left,” an MPSC spokesperson told the Daily Caller News Foundation. The state cannot raise those caps in the absence of legislative action, the spokesperson added.
That means those corrupt people in the legislature will have to vote on it. Finally, democracy.
Last year, some state regulatory body announced MD would follow CA’s phase put plan for ICE’s. Zero public awareness or comment.
Guess which political party won the governorship in 2020?
This nonsense raises costs and does nothing to lower global temperature.
BTW, the rate increase was stated to be due to the need to improve our power grid to get it ready for Green energy.
“Zero public awareness”. That’s exactly why so much of this green crap gets by…. if things like the EV mandate don’t get rescinded by near future administrations, the poo will eventually hit the fan. But, like the frog in the pot, once the water starts boiling, the frog has far fewer options. So eventually one day people will go to purchase new cars (at what few dealerships of new vehicles will be left) and will be like “WTF?!” when told they can no longer purchase gas powered vehicles. The average person is blissfully ignorant of the coming ban and once it takes effect, there will likely be more than a few people storming out of car dealerships. Unless of course the salespersons can convince them to take a look at whatever used gas powered vehicles they have on hand.
It is very unfortunate that so many people are so ignorant. Imagine if someone told you that in a few years, they were going to do something that would possibly make your life a lot more difficult. I’d think that most people would be, at the very least, concerned, if not incensed. But yet the future banning of ICE vehicles barely registered a shrug, if that. I don’t know whether people think it isn’t going to really happen, or maybe they see it like some far off and rare threat like an asteroid impacting the earth. Problem is, regulations like this are like asteroids. If you can see them coming, you might be able to do something to stop them. But if you keep putting your head in the sand (worse yet, you know about it but you don’t share that info) eventually it will hit you.
BTW, I also live in Maryland and so I too keep on these things.
I was speaking to a very democratic friend, who had no idea of the EV mandate. He is an educated engineer. His response was that “they” would have to rescind it since it is impossible. When I said this will cost the manufacturing companies billions if “they” do, he response was so what. They are just greedy corporations.
This is an intelligent man.
Like many dems I know, he is a highly educated ignoramous who only reads papers like NYT and watches CNN or other MSM news that only produces approved narrative which is rarely based on reality.
Since MD has ambitious carbon reduction targets, the state will have to agree to higher prices for wind energy or abandon their targets.
Democrats.
And those powers that be (Dems) are so mind-numbingly stupid! As I’m sure you are aware, large numbers of people live just outside of Maryland’s borders in neighboring states (PA, WV, VA) where they can avail themselves of cheaper living and still have those nice paying jobs in Maryland, The state is a tiny one and even those of us who still live here can easily travel to neighbor states to purchase goods that aren’t available here. You want fireworks, cheaper tobacco products and styrofoam plates? Go to PA, VW or VA. You want raw milk (without having your own cow)? Go to PA. Wont’ be long before, when you want a new car, you will also be visiting your neighbor states for that as well.
In other words, people are going to do and get what they want. And in a tiny state like Maryland, many are well able to do that by taking a short drive.
I think there is a deeper problem with offshore wind than ‘inflation, supply chain problems, and insufficient subsidies’.
Oersted and the other big wind guys have probably now realized they have a huge warranty based (20 year) engineering liability. Even big onshore wind shows the problem—premature Axial bearing failure. Axial bearing wobble is inherent in large wind turbines because wind speed aloft is faster than near surface. So the blades are never evenly loaded, and the spindle wobble forced onto the spindle axial bearing is 3x per each full rotation. Just making beefier bearings does NOT solve the inherent problem—both bearings and their races hate wobble.
For Siemens Gamesa big onshore wind alone, the liability is estimated to be $2-3 billion.
Offshore wind is supposed to be ‘better’ because can be bigger (onshore is limited to ~3Mw per turbine by blade length transportation limits). A bigger axial bearing wobble problem in a more corrosive environment. Reality bites.
True but at this point no one has stopped building wind facilities. There is in fact a global boom in offshore wind development which is where a lot of the logistical problems come from. The two US projects actually cancelled at this point we’re mostly because they could not get the monster crane boats they needed to drive the monster monopiles.
speaking of which look at this picture of a new monopile:
https://www.offshorewind.biz/2023/07/03/eew-rolls-out-first-ocean-wind-1-monopile/
it dwarfs the people. Imagine driving this monster into the seabed. Only a few boats can do that.
Wow, that is big- what is it, steel? Obviously it’ll never be removed. I wonder how long it’ll last- for thousands of years or just a century or so before it crumbles?
What a waste of resources and money….
Orsted announced today that the Project is uneconomical, but they will continue to pursue permits. In other words, Orsted believes, as I do, that Biden is so committed to offshore wind that he will solve the financing problem with government guaranteed loans that wink-wink are like student loans: Repayment is optional, but not expected.
No I think they expect the customer states to pay more. New Jersey just agreed to on two big projects. So has the UK by the way.
The UK “contact for difference” from my understanding is a payment over and above a base rate price that is a general fund paid subsidy not a rate base add on, am I wrong?
You are definitely right about the UK and supposedly Germany, if they get their budgeting straightened out, sucking up the big cranes. But those economies will be in even worse shape after they plant a few more during the next couple years. They’ll be available then. I can’t imagine anyone building a whole fleet of offshore vessels to meet the unrealistic goals for offshore wind. I need to cling to the hope the insanity will play out sooner instead of later.
I have seen some videos of these windmills falling over…catching fire …and blades flying off…..what if terrorists/vandals used a rifle to shoot at these monstrosities? Expensive, no?
oh, oh a few well-placed shoots through one of the three fiberglass blades would cause enough vibration to cause a shutdown. What was that they said about security of supply?
State Subsidies? Inflation Reduction Act, but, but, inflation is too high (and other economic pressures?). This is starting to make Alice in Wonderland sound plausible.
“Key Player in Biden’s Offshore Wind Push Withdraws from Deal with Blue State, Blames Inflation”
Key Player in Biden’s Offshore Wind Push Withdraws from Deal with Blue State, Blames lack of a climate crisis.
Fixed it for you.
More good news.
There is only one legitimate question concerning power generators. Can your facility produce the power we need when we need it? Wind and solar can’t so they shouldn’t be considered.
Fire up all fossil fuel and nuclear generators build new fossil fuel and nuclear generators. Problem solved.
Sorry, reason and logic, and definitely common sense are not allowed in government circles or any kind of climate group.
Everyone builds offshore wind, only the US can’t.
And we in the United States are happy about that
The UK have cancelled several offshore wind turbine projects, as has Spain and Denmark. Often it is wise to do a little research before commenting.
People who love whales should be happy about this development.
I’m happy. I hope all these windmills projects go down in flames. They are a waste of money and resources. And they don’t solve any problems, they create them.
Lol! The great Finagle is now succeeding the great Boondoggle as politicians, desperate not to admit renewables were wrong choices, are now simply letting them fail due to lack of subsidy, whilst at the same time declaring cheaper and more effective nuclear power to be ‘renewable’..
If you require big piles of government money while crushing utility rate payers with higher bills, you aren’t creating value, you are destroying value.
It’s their lying that is so annoying.