It’s time to take a closer look at the shaky world of offshore wind projects in the United States. It appears that the house of cards may be collapsing. One prime example is the Ørsted company’s Ocean Wind 1 project in New Jersey, which has been delayed until 2026. This is quite a step back considering they had previously announced construction would be beginning in October 2023. What’s causing this delay? Well, supply chain issues, higher interest rates, and a failure to secure enough tax credits from the federal government. As a result, Ørsted’s stock price has dropped by 30% in just five days.
Ocean Wind 1 had one of the highest guaranteed prices among the 18 offshore wind projects awaiting approval. The actual wholesale price guarantees for Ocean Wind 1 start at $98.10/MWh, increasing by 2% each year. Over twenty years, that averages out to $126.47/MWh. However, Ørsted is now seeking even higher guarantees from the New Jersey Board of Public Utilities, and an increase in federal Investment Tax Credits from 30% to 40%.
Meanwhile, offshore wind projects off New York are asking for an average 48% increase in guaranteed prices, which could lead to a staggering $880 billion per year added to electric rates. And in North Carolina, Duke Energy has abandoned offshore wind in favor of nuclear, solar, and onshore wind. They are also wisely committed to only closing existing power plants once replacements are up and running.
Add to all this the fact that two new offshore wind lease areas in the Gulf of Mexico received no bids, and the Vineyard Wind project off Nantucket is facing three unresolved lawsuits. The problems are multiplying.
The turbine manufacturers, like Siemens Gamesa, are feeling the heat too, with almost $5 billion in losses for 2023 due to warranty repairs. Their stock price has also tumbled by 30% since June.
What’s the takeaway from all this? The offshore wind industry is in disarray, facing increasing costs, durability concerns, and legal entanglements. For everyday Americans, it could mean skyrocketing electricity prices, and for businesses, it could mean tens of thousands of dollars in added costs. A recent poll even shows a significant drop in public support for offshore wind in New Jersey. People are becoming wary of the grand promises of green energy when the reality is looking quite different.
