USA - Wind power is losing in New Jersey, but winning in Virginia. Here's where the rest of the U.S. stands. (with wind news compilation)
Rising interest rates, inflation and supply-chain hurdles are painful realities for the industry looking to help replace Earth-warming fossil fuels
The Biden administration early this week approved the construction of the largest wind-power farm in the United States, more than 170 giant turbines to be built roughly 27 miles off the coast of Virginia Beach, Va.
Dominion Energy's (D) Coastal Virginia Offshore Wind project, supplemented by federal dollars, is expected to be completed in 2026 and at full operation, can produce enough electricity to power 660,000 nearby homes on shore. That energy source would bolster and eventually replace the mostly natural gas-powered (NG00) electricity that is contributing to costly climate change.
The wind-power industry's cheers were quickly muffled, however.
A day after the Virginia news, Danish concern Ørsted(DK:ORSTED), the world's largest offshore wind-farm developer, abandoned two U.S. projects in New Jersey in a sudden reversal that surprised state officials.
Ørsted's David Hardy, who leads its Americas operations, blamed "high inflation, rising interest rates and supply-chain bottlenecks" in a statement. Ørsted is now reviewing its entire U.S. wind portfolio, the company said.
The US offshore wind industry faces a moment of reckoning, Canary Media / November 02, 2023
What does Orsted's offshore wind fail mean for California?, POLITICO / November 01, 2023
Wind turbines are generating high emotions | Editorial | Coastal Point / November 02, 2023
Because renewable-energy projects are capital-intensive as they're built from scratch, the industry had taken advantage of historically rock-bottom interest rates to build out wind (as well as solar) farms, at least in areas like traditional fossil-fuel-giant (CL00) Texas, where windy days are prominent. Increasingly for the U.S., funding has flowed for major offshore wind farms that could play a pivotal role in electricity for the heavily populated coasts.
Blame 'high inflation, rising interest rates and supply-chain bottlenecks' for abandoned New Jersey wind-power plans.Ørsted's David Hardy
Now, the Federal Reserve has been raising interest rates, increasing the cost of borrowing without significantly reigning in inflation. And that inflation is making the cost of inputs to build wind turbines, including steel, more expensive.
Ørsted officials on a call said they've also struggled to secure the large ocean vessels needed to carry turbines.
"Unexpected high interest rates coupled with supply-chain delays have made it challenging for pre-pandemic contracts to pencil out in today's world," Doug O'Malley, the New Jersey state director for Environment America, an advocacy and policy group supporting renewable energy, told MarketWatch.
"Our hope is that industry and government officials can overcome these short-term obstacles and keep America on track to harness the clean, renewable, unlimited power the wind offers every day," he said.
A setback to 30 gigawatts by 2030?
Biden, early in his first term, announced a goal of installing 30 gigawatts of offshore wind power by 2030, enough to power 10 million homes and prevent the spewing of 78 million metric tons of carbon-dioxide emissions. Those emissions warm the atmosphere and contribute to more deadly storms, coastal erosion and more.
U.S. offshore wind has been helped along by nearly $8 billion in investments since Biden signed his signature, climate-heavy Inflation Reduction Act a little over a year ago.
Read: Climate winners and losers as the Inflation Reduction Act hits 1-year anniversary
Biden's team has projected that the U.S. could install 110 gigawatts of offshore wind power by 2050, a major jump considering there is less than 1 gigawatt installed today. Land-based wind farms across the U.S. already produce more than 140 gigawatts of energy, contributing to about 10% of the nation's energy portfolio.