A major offshore wind developer announced that it is cancelling two major developments on Tuesday evening.
Orsted, a Denmark-based offshore wind firm with a major presence in the U.S. market, said that it has cancelled its Ocean Wind 1 and 2 projects off the coast of New Jersey, a decision which deals a major blow to the Biden administration’s offshore wind goals. The cancellations follow weeks of mounting financial problems for the company and for the offshore wind industry more broadly.
“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” David Hardy, group executive vice president and CEO of Americas at Orsted, said of the firm’s reasoning for the cancellations. “As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2. We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy.”
The company also announced that it is taking a final investment decision on its Revolution Wind project off the Rhode Island coast, a development which the Bureau of Ocean Energy Management already approved in August. (RELATED: Biden Admin Greenlights Biggest Offshore Wind Farm Yet As Industry Flounders)
Not much interest in the offshore wind leaseshttps://t.co/EeKTqG90vw
— Daily Caller (@DailyCaller) August 30, 2023
Orsted’s struggles first became glaringly apparent in late August, when the company announced that it was marking down the expected value of some of its projects by more than $2 billion due to the issues that ultimately forced it to cancel the projects. Orsted’s stock price tanked following that announcement, and it has not since recovered, according to data from Google Finance.
CEO Mads Nipper warned in early September that the company could walk away from its U.S. projects if the financial situation did not improve quickly, according to Bloomberg News.
The offshore wind industry has struggled immensely in recent months due to inflation, supply chain backups, higher interest rates and logistical problems, and some energy industry experts told the Daily Caller News Foundation that the industry could soon need a bailout package in order to stay afloat.
The Biden administration wants offshore wind to provide enough energy to generate electricity for 10 million American homes by 2030 in support of its wider goals to decarbonize the American power sector by 2035 and the overall U.S. economy by 2050.
The nameplate output capacity of the two cancelled projects amounts to more than 6% of the 2030 target set by the Biden administration, and that goal may now be out of reach given that some analysts already believed it to be before the announcement of these two cancellations.
The White House and the Department of Energy did not respond immediately to requests for comment.
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