Contrary to optimistic predictions, the U.S. offshore wind industry continues to face significant challenges in 2024, including inflation and logistical issues.
By yourNEWS Media Newsroom
Despite predictions by analysts and consulting firms, the U.S. offshore wind sector has not experienced the anticipated rebound in early 2024. Analysts from Wood Mackenzie, Deloitte, and environmental lawyers from Locke Lord had projected a recovery following a difficult 2023. However, ongoing challenges such as inflation, high borrowing costs, and logistical problems continue to impede progress.
Kevin Dayaratna of the Heritage Foundation highlighted the difficulty of making offshore wind a mainstream energy source despite significant subsidies. He noted that about 60% of all contracts signed by U.S. offshore wind developers since early 2023 have been cancelled. Notably, Ørsted, a leading developer, withdrew from major projects in New Jersey due to unfavourable economic conditions.
The beginning of 2024 saw similar developments, with companies like Equinor and BP backing out of a New York state contract for the Empire Wind 2 project on the same day Locke Lord attorneys optimistically wrote about the sector’s prospects. Shortly after, three more New York projects were cancelled.
Despite these setbacks, industry forecasts from Wood Mackenzie suggested a bright future with increased activity and profitability in 2024. Yet, the following day, Ørsted announced its withdrawal from additional projects in Maryland.
Deloitte consultants echoed a sentiment of recovery, emphasizing potential improvements in 2024 due to new construction projects and transmission enhancements facilitated by federal programs. Meanwhile, Reuters described the industry as poised for success in the upcoming year.
Despite these optimistic projections, the offshore wind sector’s struggles complicate President Joe Biden’s climate agenda, which aims to power 10 million American homes by 2030. Reports suggest this target is unlikely to be met due to ongoing industry difficulties.
The Biden administration continues to push forward, recently releasing a comprehensive five-year leasing plan for offshore wind, highlighting the administration’s commitment to this energy sector despite the significant economic and logistical challenges it faces.
