Deepwater Wind installed the first offshore wind farm at Block Island, R.I., in 2016. More recent projects have run into financing concerns, even as East Coast states count on offshore wind to meet their clean energy goals. John Moore/Getty Images

NJ - Despite setbacks, states are still counting on offshore wind

In recent months, East Coast states’ plans to install massive new offshore wind farms have been battered by bad economic news, canceled contracts and newfound uncertainty about the projects officials are counting on to reach their clean energy goals.

Despite the setbacks, state leaders say they don’t intend to dial back their offshore wind ambitions. They’re planning new strategies and investments to help the industry weather its rocky start. And they’re holding fast to mandates that offshore wind make up a substantial portion of their future power supply.

“New Jersey is committed to wind energy, and doubling down is the answer,” New Jersey state Sen. Bob Smith, a Democrat who chairs the Environment and Energy Committee, said after a developer canceled two projects off the state’s coast. “I don’t think we have a choice. Offshore wind could literally be an inexhaustible source of energy.”

Some developers who have recently pulled out of long-planned projects cite interest rates, inflation and supply chain issues, saying the price at which they agreed to sell their energy no longer warrants their costs. States have resisted the companies’ requests for more subsidies or price hikes, casting additional projects in doubt.

Some observers say that for states to reach their clean energy goals, governments — and customers of public utilities — may have to pay more than they initially planned.

“State lawmakers have their backs in a corner here,” said Carlos Ochoa, ocean program manager with the National Caucus of Environmental Legislators, a forum for state lawmakers. “If they don’t want to renegotiate with those projects, they’re going to have a delay in the construction of the projects and put in jeopardy their mandates.”

In Massachusetts, developers canceled a pair of projects earlier this year, saying they could not complete the work under the original agreement. The state is seeking new bids for those projects, which may come in at double the initial price, said state Sen. Julian Cyr, a Democrat who has promoted offshore wind in his district in the Cape Cod region.

In response, Massachusetts has partnered with Connecticut and Rhode Island to collectively seek 6 gigawatts of offshore wind — enough to power 2 million homes — by allowing bidders to submit multistate proposals.

“We’re going to look back and say this was a really positive outcome of this unfortunate period,” said Katie Dykes, commissioner of Connecticut’s Department of Energy & Environmental Protection. “It will allow us to secure lower prices through economies of scale, and to share the cost of individual projects.”

Dykes said states in the region also are discussing combined investments in transmission infrastructure, and they’ve used the slowdown in project builds to align their technical standards on transmission to ensure power from offshore turbines can move throughout the region.

In New York, state regulators announced that they would speed up the process for soliciting new offshore wind proposals, in part to backfill projects that developers are expected to cancel. Last month, the state announced a $300 million investment to build facilities that will construct blades and other turbine components.

“New York is in an active position in addressing the challenges facing the industry, not a passive position,” said Doreen Harris, president and CEO of the New York State Energy Research and Development Authority. “We believe we can solve for all these variables.”

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