A few years back, interest in offshore wind energy was so high that developers suggested spending billions to plant hundreds of turbines the size of skyscrapers in the Atlantic Ocean from Maine to Virginia. However, some projects recently hit setbacks due to the impact of the pandemic and rising interest rates on supply chains. As a result, the offshore wind industry found manufacturing, transportation, and erection of turbines more challenging than expected. Instead of the hundreds of turbines proposed, only a few dozen have been installed in U.S. waters.
The cost of offshore wind energy will be higher than anticipated, and its climate and economic benefits may be delayed. Some wind farms may be delayed or never built. As a result, Eastern states have awarded contracts to build roughly two dozen offshore wind farms, but many developers have canceled or asked to renegotiate rates for almost half of that capacity. Analysts are now predicting about 15 gigawatts of offshore wind will be installed by 2030, which is lower than expectations.
Orsted, a Danish company that has built around two dozen offshore wind farms, has canceled some planned giant offshore wind arrays in the U.S. due to anticipated large write-offs. Similarly, BP recently wrote off a significant amount of its investment in the U.S. offshore wind market. States like New York and Massachusetts are acknowledging that they will need to pay higher prices for the electricity generated by offshore turbines than they had anticipated.
Despite these setbacks, President Biden’s administration plans to complete federal reviews for at least 16 offshore wind farms by 2025. Some executives in the offshore wind industry are hopeful that the investments currently being made will pay off in the coming years. However, the industry is currently facing a significant challenge due to the lack of a robust domestic supply chain for offshore wind projects.