Financial challenges, including supply chain issues, rising interest rates, and inflation are threatening several East Coast projects seen as critical for wind power projects vital for the Biden administration to reach its near-term targets on clean energy.
"We're seeing unexpected and unprecedented macroeconomic challenges," David Hardy, chief executive of the Americas for Danish power company Ørsted A/S, a company developing offshore wind projects between Rhode Island and Maryland, commented to The Wall Street Journal.
The Danish company would be responsible for the development of about 5 gigawatts of offshore wind projects, at a time when the administration has set a target to develop 30 gigawatts of offshore wind power by 2030, which would be enough to supply electricity to some 10 million homes.
However, analysts are saying that target may be difficult at best to reach if current cost and supply chain issues continue.
Another company, Avangrid, a subsidiary of Spanish power company Iberdrola that is developing the Commonwealth Wind project, which would deliver 1.2 gigawatts of power off the Massachusetts coast, in December asked the state's Department of Public Utilities to terminate its review of contracts that were negotiated with utility companies that serve the state. Instead, the company said it plans to cancel those contracts while rebidding the project next year after experiencing higher costs.
Mayflower Wind Energy LLC, a joint venture between Shell New Energies US LLC and Ocean Winds, which is developing another project off the Massachusetts shore, also said in filings that its contracts have been affected and is planning a third-party analysis to show the financial costs the company is facing.
Federal permitting has long been a problem for the United States offshore wind industry. For example, Vineyard Wind LLC, the joint venture between Avangrid and Copenhagen Infrastructure Partners, the nation's first large-scale project off the coast of Massachusetts, is not expected to start producing power until late next year, marking six years since it began its permitting process.
The projects in the United States are also facing competition from Europe, where countries are trying to push their projects forward after the invasion of Ukraine. The wave of projects is further straining the supply chain, as well as limiting the number of available specialized installation vessels that are needed to transport the turbines needed at the sites.
Samantha Woodworth, a senior research analyst at Wood Mackenzie, commented that any delays to even one project in the United States or Europe could hinder other projects. Her company expects that such delays will cause the U.S. to fall by 2 gigawatts short of the goals set by the White House.
Meanwhile, Richmond, Va.-based Dominion Energy Inc. has the only offshore-wind installation vessel under construction in the United States. The vessel is expected to be used in 2024 to service two wind-power facilities for Ørsted and New England utility company Eversource Energy before moving on to a 2.6-gigawatt project Dominion is building off the Virginia coast.
According to Josh Bennett, Dominion's vice president of offshore wind, the vessel is 60% complete while the company's $9.8 billion offshore wind farm is on budget and schedule because the company signed its supply contracts before the constraints happened.
"There's so much demand now,” Bennett said. "If you were to attempt to do an offshore wind project starting today, it would take you out into the late '20s or early '30s."
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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