A major offshore wind developer announced Thursday that it withdrew from a deal with a state utility regulator for two offshore wind projects, citing inflation and other economic pressures.
Ørsted, a key corporate player in the Biden administration’s offshore wind agenda, has backed out of the Maryland Public Service Commission’s (MPSC) orders approving the company’s Skipjack 1 and 2 projects off the Maryland coast, the company announced Thursday. The company said that inflationary pressure, high borrowing costs and supply chain problems have combined to make the state’s subsidies economically unviable, but that it is not yet abandoning the projects and will continue to pursue permits, according to a regulatory filing with the MPSC.
“Today’s announcement affirms our commitment to developing value creating projects and represents an opportunity to reposition Skipjack Wind, located in a strategically valuable federal lease area and with a state that’s highly supportive of offshore wind, for future offtake opportunities,” David Hardy, the executive vice president and CEO of region Americas at Ørsted, said in a Thursday statement. “As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available. We’ll continue to advance Skipjack Wind’s development milestones, including its construction and operations plan.” (RELATED: Blue State Doubles Down On Offshore Wind After 2023’s Massive Failure)
“The statutorily-mandated caps on the residential ratepayer impacts have very little room left,” an MPSC spokesperson told the Daily Caller News Foundation. The state cannot raise those caps in the absence of legislative action, the spokesperson added.
The withdrawal is the latest sign of trouble for Ørsted, which pulled the plug on two major projects off the New Jersey coast in October 2o23 after many of the same underlying factors made those projects untenable. At one point, the company appeared poised to become a major beneficiary of the Inflation Reduction Act (IRA), President Joe Biden’s signature climate bill, but the mounting macroeconomic problems that have beleaguered the economy through his first term have weighed heavily on the company.
“Yesterday’s news from Ørsted is disappointing — the Skipjack project was an important component in advancing Maryland’s clean energy goals,” MPSC Chair Frederick Hoover said of the withdrawal. “However, the Commission remains optimistic about the future of the offshore wind industry in Maryland, and would note that the US Wind project continues to move through the federal approval process.”
The withdrawal is the latest sign of distress for the Biden administration’s offshore wind goals, especially if it turns out to be a precursor for the eventual collapse of the company’s Maryland projects. The White House is aiming for offshore wind to produce enough electricity to power more than 10 million American homes by 2030, but that goal now appears to be firmly out of reach, according to Reuters.
Neither Ørsted nor the White House responded immediately to requests for comment.
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