WASHINGTON (AP) 鈥 The cancellation of two large offshore wind projects in New Jersey is the latest in a series of setbacks for the nascent U.S. offshore wind industry, jeopardizing the Biden administration鈥檚 goals of powering 10 million homes from towering ocean-based turbines by 2030 and establishing a carbon-free electric grid five years later.
The Danish wind energy developer 脴rsted it鈥檚 scrapping its Ocean Wind I and II projects off southern New Jersey due to problems with supply chains, higher interest rates and a failure to obtain the amount of tax credits the company wanted. Together, the projects were supposed to deliver over 2.2 gigawatts of power.
The news comes after developers in New England canceled power contacts for three projects that would have provided another 3.2 gigawatts of wind power to Massachusetts and Connecticut. They said their projects were no longer financially feasible.
In total, the cancellations equate to nearly one-fifth of President Joe Biden鈥檚 goal of 30 gigawatts of offshore wind power by 2030.
Despite the setbacks, offshore wind continues to move forward, the White House said, citing recent investments by New York state and approval by the Interior Department of the nation鈥檚 . Interior鈥檚 Bureau of Ocean Energy Management also announced new offshore wind lease areas in the Gulf of Mexico.
鈥淲hile macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry 鈥 creating good-paying union jobs in manufacturing, shipbuilding and construction,鈥 while strengthening the power grid and providing new clean energy resources for American families and businesses, the White House said in a statement Thursday.
Industry experts now say that while the U.S. likely won鈥檛 hit 30 gigawatts by 2030, a significant amount of offshore wind power is still attainable by then, roughly 20 to 22 gigawatts or more. That鈥檚 far more than the nation has today, with just two small demonstration projects that provide a small fraction of a single gigawatt of power.
Large, ocean-based wind farms are the linchpin of government plans to shift to renewable energy, particularly in populous East Coast states with limited land for wind turbines or solar arrays. Eight East Coast states have offshore wind mandates set by legislation or executive actions that commit them to adding a combined capacity of more than 45 gigawatts, according to ClearView Energy Partners, a Washington-based research firm.
鈥淚 think very few people would argue that the U.S. will have the gigawatts the Biden administration wants鈥 by 2030, said Timothy Fox, a ClearView vice president. 鈥淏ut I do think eventually we will have it and will likely exceed it.鈥
Offshore wind developers have publicly lamented the global economic gales they鈥檙e facing. Molly Morris, president of U.S. offshore wind for the Norwegian company Equinor, said the industry is facing a 鈥減erfect storm.鈥
High inflation, supply chain disruptions and the rising cost of capital and building materials are making projects more expensive while developers are trying to get the first large U.S. offshore wind farms opened. 脴rsted is writing off $4 billion, due largely to cancellation of the two New Jersey projects.
David Hardy, group executive vice president and CEO Americas at 脴rsted, said it鈥檚 crucial to lower the levelized cost of offshore wind in the United States so Americans aren鈥檛 debating between affordability and clean energy. Hardy spoke at the American Clean Power industry group鈥檚 offshore wind conference in Boston last month on a panel with Morris.
鈥淲e鈥檙e probably a little bit too ambitious,鈥 he said. 鈥淲e came in hot, we came in fast, we thought we could build projects that were inexpensive, large projects right out of the gate. And it turns out that we probably still need to go through the same learning curve that Europe did, with higher prices in the beginning and a little slower pace.鈥
In May, there were 27 U.S. offshore wind projects that had negotiated agreements with states to provide power before the brunt of the cost increases hit, according to Walt Musial, offshore wind chief engineer at the 香港六合彩挂牌资料 Renewable Energy Laboratory, an arm of the Energy Department. The delay between signing purchase agreements and getting final approval to build allowed unexpected cost increases to render many projects economically unfeasible, he said.
Musial called 脴rsted鈥檚 announcement a setback for the industry but 鈥渘ot a fatal blow by any means.鈥
On Tuesday, the Biden administration announced approval of the nation鈥檚 largest offshore wind project. The Coastal Virginia Offshore Wind project will be a 2.6 gigawatt wind farm off of Virginia Beach to power 900,000 homes. And even as 脴rsted announced the New Jersey cancellations, it said it was investing with utility Eversource to move forward with construction of Revolution Wind, Rhode Island and Connecticut鈥檚 first utility-scale offshore wind farm, a 704-megawatt project.
The current outlook from S&P Global Commodity Insights is 22 gigawatts by 2030, though that will be revised due to the recent industry announcements.
New York state, meanwhile, recently announced the award of 4 gigawatts of offshore wind capacity as it seeks to obtain 70% of its electricity from renewable sources by 2030 and 9 gigawatts of offshore wind by 2035. That announcement came shortly after New York regulators rejected a request for bigger payments for four offshore wind projects worth a combined 4.2 gigawatts of power. Those developers said they were assessing the viability of their projects.
Any delay in offshore wind means continued reliance on fossil fuel-burning power plants, according to environmental advocates.
鈥淭he quicker they come online, the quicker our air quality improves,鈥 said Conor Bambrick, director of policy for Environmental Advocates NY.
New Jersey, under Democratic Gov. Phil Murphy, has established increasingly stringent clean energy goals, moving from 100% clean energy by 2050 to 100% by 2035. Murphy cast 脴rsted鈥檚 decision as 鈥渙utrageous鈥 and an abandonment of its commitments, but the two-term Democrat said New Jersey plans to move forward with offshore wind. Additional offshore projects are pending before the state鈥檚 utility regulators.
鈥淲e definitely remain optimistic,鈥 said Catherine Klinger, Murphy鈥檚 climate action and green economy executive director. 鈥淥ffshore wind is a lot bigger than 脴rsted.鈥
The first U.S. commercial-scale offshore wind farms are currently under construction: Vineyard Wind off Massachusetts and South Fork Wind off Rhode Island and New York.
Catherine Bowes, a senior director at Turn Forward, a nonprofit that advocates for offshore wind, believes the industry still has strong momentum because of the quality of the wind resources off the coastlines and the growing demand for clean electricity to meet decarbonization goals. The nonprofit is advocating for 100 gigawatts of U.S. offshore wind power.
鈥淭he bumpiness we鈥檙e seeing right now in no way indicates an inability of offshore wind to play a major role in the U.S. electric grid,鈥 Bowes said Thursday.
Terminated contracts can be rebid, presumably with higher prices to cover development costs. Offshore wind developers are asking the federal government to ensure the industry can take advantage of tax credits under the Inflation Reduction Act to help these first projects become operational.
Michael Brown, CEO of Ocean Winds North America, which is developing several offshore projects, including one in New Jersey, said at the clean power conference that the industry will thrive in the U.S. but 鈥渋t might be a little bit slower than we all want it.鈥
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McDermott reported from Providence, Rhode Island; Hill from Albany, New York and Catalini from Trenton, New Jersey.
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