(Turbine towers near Copenhagen’s harbor at Sunrise Denmark gets about half of its electricity from wind)
Good evening,
The rosy outlook for offshore wind projects has dimmed as a perfect storm of inflation-driven costs, regulatory delays, and declining public support takes hold.
This comes in the wake of a warning from Ørsted CEO Mads Nipper that the Danish company stands ready to walk away from US offshore wind projects, such as the Skipjack developments off the Maryland and Delaware coasts. Ørsted’s stock value plunged on the dimmed prospects.
Nipper says costs have soared due to supply chain issues, interest rates, and inflation.
Ørsted is seeking breathing room as subsidies and other incentives for offshore wind are no longer enough to make the numbers work. The company wants relief from domestic content requirements and extra time to let prices settle down.
Governors in states where offshore wind projects hang in the balance called on the Biden Administration to provide relief through a number of measures.
The outlook was far different a few years back when interest rates were low and cheap capital was plentiful. Engineering breakthroughs had sharply reduced the cost of producing offshore show.
However, regulatory delays from a Trump Administration suspicious of wind power slowed the momentum. Then came Covid.
The Biden Administration has made offshore wind a centerpiece of its climate, labor, and infrastructure policies with promises of high-paying union jobs and even a revival of shipbuilding.
Nipper’s warning contrasts sharply with recent news that Ørsted is continuing survey work on Skipjack that will use a vessel operating near the Delaware coast.
According to a recent poll, public support for wind power in neighboring New Jersey has plunged as some residents buy into unsubstantiated claims that surveying work led to dead whales washing up on beaches. (Fishing nets and climate change seem to be bigger factors). Republicans in the Garden State have moved over to the opposition’s side with party leaders seeing offshore wind as a winning issue in 2024.
The poll also showed growing support for offshore oil drilling as gasoline prices rise, even though oil rigs and seismic tests would have a more negative effect on marine life than wind generators.
The Biden Administration, meanwhile, is left with tough choices heading into the 2024 presidential campaign, with any change in course likely to draw fire from the left, the right or both.
For Delaware, prospects for an offshore project that would help the state meet its alternative energy mandates have soured at least in the short term. – Doug Rainey, chief content officer.
