CONTRIBUTOR
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.
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 in to 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.” (RELATED: Blue State Doubles Down On Offshore Wind After 2023’s Massive Failure)
Since the start of 2023, approximately 60% of all contracts signed by American offshore wind developers have been cancelled, 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 start 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.
“Vessel owners and operators are actively contracting with original equipment manufacturers and project developers to reserve vessels for project construction in 2024 and beyond,” Locke Lord attorneys M. Benjamin Cowan and Emily Huggins Jones wrote on January 3. “Thus, despite significant headwinds in 2023, with improving economics, more flexible procurement procedures, continued federal support, and increasing legislative support, the U.S. offshore market appears to have weathered the worst of the storm and is poised for growth in the coming year.”
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 cancelled 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. (RELATED: Environmental Laws That Impeded Pipelines For Years Could Trip Up Biden’s Sprint Toward Offshore Wind)
Several senior employees of Deloitte, one of the country’s top consulting firms, also projected confidence that the offshore wind industry would be able to turn things around in 2024.
“Offshore wind investments dropped in 2023 amid challenges with costs and permitting, but the tide is expected to turn in 2024 as construction and operations get underway at several key projects,” reads a February 9 piece by Deloitte consultants Marlene Motyka, Jim Thomson, Kate Hardin and Carolyn Amon published in The Wall Street Journal’s “sustainable business” section. “Transmission is a factor in many constraints on renewable deployments, although [Infrastructure Investment and Jobs Act] and [Inflation Reduction Act] programs and grants could start tackling transmission issues in 2024.”
Reuters, a global news outlet, echoed some of this optimism in its own projection that the American offshore wind industry would rally after 2023’s turbulence.
“The U.S. offshore wind industry is eying a brighter 2024, with work expected to start on several projects following a year marked by stalled developments and billions of dollars in write-offs,” reads a Reuters piece published in December 2023 under the headline “U.S. offshore wind poised for success next year after turbulent 2023.”
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.”
Wood Mackenzie, Reuters, Deloitte, Locke Lord and the White House did not respond to requests for comment.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.
Basing energy strategy on uncontrollable and unpredictable sources is insane. Then again, I see a lot of insanity every day.
I guess Cheap Wind is just too damned expensive to build
So, despite subsidies, wild abandonment of normal permitting procedures (don’t let anymore of those dead whales wash up and provide a photo-op), great electricity utility rates, and damaging dependable/dispatchable electricity sources, the offshore undependable energy is not economic? Maybe it’s time to abandon Plan B and go back to Plan A?
Without Off-Shore Wind and “all that excess capacity”, Direct Air Capture and E-fuels are doomed next. Oh yea, there is that IRS ruling requiring matching of REC’s and usage within an hour of production that will put a damper on electrolytic hydrogen too.
These projects have been a huge success, once you understand the actual goals.
Nailed it. The same goes for ObamaCare and the Inflation Reduction Act.
One must wonder, if these vessels get “Reserved” for offshore wind projects that then get scrubbed, how much will it cost the developers for projects skipped over because these vessels weren’t supposed to be available and will the tax payer foot the bill??
I don’t think inflation is a problem here . It’s being used a cover for a realisation
that the whole caper is busted and depends on taxpayer subsidy just when taxpayers are waking up. Anyway , CO 2 doesn’t affect the weather.
Don’t know if I have posted this graphic here before or not, but it is significant that offshore wind power in Germany is completely stalled. I recall reading articles several years ago when Germany first started with offshore wind. The consensus was if anybody could make offshore wind power work, it would be Germany.
They have stopped talking about it.
Note that solar growth is also low. Solar power drops 90% in the winter in Germany.
Onshore wind is still slowing growing. Where do they find the land to put wind farms in Germany?
Bottom line, wind and solar are stalling out in Germany, and they haven’t even started to seriously convert their economy (residential heat, industrial, transportation) to electricity from traditional fuel sources.
In the face of such facts, the push by our politicians to convert to wind and solar is nothing short of criminal. It is fraud, pure and simple.
From the load figures, I see that Germany’s Leftist rulers are reliably shifting industrial production out to rational countries.
Where do the Germans find the land for their wind turbines? Future generations of pastry chefs will understand when they make their delicious spongy chocolate Carbon Fiber Turbine Bladecakes.
Germany has to stop pretending it can make stuff using wind and solar power.
Germany would be better placed to ask China to build a power line from China to Germany and build a few more coal fuelled power plants in China to supply Germany. That would provide low cost power and Germany could get back to making cars that people might buy at a competitive price.
Germany actually achieves a low carbon economy and the illusion remains alive. That is better than their current trajectory where all their manufacturing will move to China and once China has the intellectual property they no longer need the Germans.
No mention of the legal problems?
Exactly why I hoped Manchin wouldn’t get the promised “permitting reforms” from his backstabbing democrat sociopath colleagues. You knew it wouldn’t be used to advance useful (read fossil fuels) energy projects (as Manchin wanted). Instead, it would be used to shove worse-than-useless wind and solar projects down people’s throats.
Hoist by their own petard!
Not many sniffed that out at the time. I knew exactly what the commies had up their sleeve.
Sum it up in three words:
NOT ECONOMICALLY VIABLE.
Wind energy production fits the Marxist goal perfectly. Reduces energy, paid for by those that can least afford it, further enriches those with money who are oblivious to the consequences, and hastens the collapse of Capitalism.
Best guesses? I’d hate to see the worst guesses.
• Affordable
• Reliable
• Renewable
Pick two.
I know what you mean, however, that third choice just doesn’t fit with the other two.
On second read I see you did not use the word “any”
The top two can be found with any FF energy source.
The last one cannot be included in a simple sentence with either of the first two…truthfully!
It can be affordable and renewable but absolutely not reliable.
Given an infinite investment of funding and resources, it can be reliable and renewable, but absolutely not affordable.
Point made about FF is spot on.
“Wood Mackenzie, Reuters, Deloitte, Locke Lord and the White House did not respond to requests for comment.”
Of course they didn’t. Climate science and CAGW, along with its advocates, are *never* held accountable for anything. If they promised windmills on the moon would be a cheap energy alternative exactly who is going to hold them accountable for saying it? Not the mainstream media for sure.
Better make up some excuses to kill off wildlife in order to keep the agenda training rolling for wind power.
They Shoot Owls in California, Don’t They? (yahoo.com)
China has to burn a lot of coal to make all the stuff that goes into weather dependent generation and associated transmission and storage. Estimated consumption in 2024 is 4.26bn tonne. That would be good if coal was an unlimited resource but China will eventually run out.
USA needs to accelerate its export of coal to China so it can be used to make all the stuff the US needs for its energy transition. Only 6Mt of US coal was exported to China in 2023. That would only build one moderate sized onshore wind farm. Heavy industry is so messy. It is better to leave it to China and India.
Australian exports to China totalled USD120bn in 2023. Coal was a significant slice of that (mostly met coal) and it buys a lot of solar panels, wind turbines, synchronous condensers, power lines and batteries. Thank you China for keeping the illusion alive.
Climate Ambition™. is the gift that keeps giving for Australian miners. BHP is looking for a larger slice of global copper by acquiring Anglo American. Copper benefits hugely from Climate Ambition™. Think of all those long cable to offshore wind turbines. All those generators perched up on their towers producing power about 25% of the time. They are such resource rich monsters.
The transition would actually save coal if the wind turbines and solar panels lasted a few centuries but the stuff built just 20 years ago is mostly dead now. So it all starts over every 20 years. China is bound to run out of coal before the second time around gets done! And China can never transition because someone has to make the hardware.
Offshore wind is “uneconomic”. What this really means is that it consumes more energy to construct and operate than it will ever produce in its operational lifetime. I thought the goal was “net zero” carbon emissions. Why are we doing this, again?
Um, perhaps Net Zero Energy?
Biting the bullet before they get the bullet-
‘Lefties annoyed’ following NSW to announce life extension of Eraring power station (msn.com)
As pollies well know only the impotent are pure.
Curious. What happens to all these off shore wind turbines when the ocean reaches the tipping point and sea level rises 20 feet?
Curious minds want to know why this prediction is ignored.
Because sea level is rising slower than the life span of a wind turbine (approx 30 years), so there is time to move them. (at 3mm a year approx the sea will have risen about 90mm)