Despite lavish subsidies and tax credits under the Biden Administration’s signature Inflation Reduction Act, the US offshore wind industry is in turmoil after the world’s largest wind producer said it may be forced to walk away from multi-billion dollar wind projects on the eastern seaboard..The world’s largest publicly listed offshore wind producer, Oslo-based Ørsted, on Wednesday saw its shares fall more than 25% after it said it may be forced to take massive write offs due to what its CEO calls “severe” economic and logistical conditions in the US for renewable energy..On a conference call with investors, CEO Mads Nipper warned the company may be forced to walk away from five major US wind projects off New Jersey, Virginia and New England. He blamed a combination of supplier delays, higher interest rates and a lack of government subsidies.."The situation in US offshore wind is severe," he said..It came a day after a long-awaited auction of offshore wind parcels in the Gulf of Mexico attracted just two bidders in a blow to Biden’s plans for building 30 gigawatts of offshore wind capacity by 2030..In the end, the Bureau of Ocean Energy Management (BOEM) sold a single tract near Lake Charles, LA for a paltry US$5.6 million. Two other parcels near Galveston failed to attract any bids..That compares to more than US$4.4 billion raised from a similar auction of wind leases near New York and New Jersey last year, including Orstead’s..Nonetheless, BOEM touted the result as “an important milestone” even as other offshore developers were warning of delays due to rising costs..And despite nearly a trillion dollars in US government tax breaks and subsidies for renewables, Orsted warned it just isn’t enough..“Our continued discussions with senior federal stakeholders about additional (investment tax credit) qualifications… are not progressing as we previously expected. We continue to engage in discussions with federal stakeholders to qualify for additional tax credits beyond 30%. If these efforts prove unsuccessful, it could lead to impairments,” it said in a statement..Furthermore, US long-dated interest rates have increased, which affects both its US offshore and onshore projects. If the interest rates remain at the current level by the end of third quarter, it will cause further impairments, it added..The news caused its shares to plummet to their lowest level since it listed on the Copenhagen Stock Exchange in 2016, shedding some US$7 billion in market capitalization..Ironically, it had previously been Denmark’s state-owned oil and natural gas company before it sold off all its petroleum assets to focus exclusively on renewable energy. It operates a third of the planet’s offshore wind power, excluding mainland China..The company is also reportedly facing financial issues with projects in the UK and the EU.. Offshore wind CanadaProposed offshore wind locations in Canada. .Although Canada doesn’t presently have any offshore wind power, at least five proposals are on the books including four in the Maritimes and one off the West Coast.
Despite lavish subsidies and tax credits under the Biden Administration’s signature Inflation Reduction Act, the US offshore wind industry is in turmoil after the world’s largest wind producer said it may be forced to walk away from multi-billion dollar wind projects on the eastern seaboard..The world’s largest publicly listed offshore wind producer, Oslo-based Ørsted, on Wednesday saw its shares fall more than 25% after it said it may be forced to take massive write offs due to what its CEO calls “severe” economic and logistical conditions in the US for renewable energy..On a conference call with investors, CEO Mads Nipper warned the company may be forced to walk away from five major US wind projects off New Jersey, Virginia and New England. He blamed a combination of supplier delays, higher interest rates and a lack of government subsidies.."The situation in US offshore wind is severe," he said..It came a day after a long-awaited auction of offshore wind parcels in the Gulf of Mexico attracted just two bidders in a blow to Biden’s plans for building 30 gigawatts of offshore wind capacity by 2030..In the end, the Bureau of Ocean Energy Management (BOEM) sold a single tract near Lake Charles, LA for a paltry US$5.6 million. Two other parcels near Galveston failed to attract any bids..That compares to more than US$4.4 billion raised from a similar auction of wind leases near New York and New Jersey last year, including Orstead’s..Nonetheless, BOEM touted the result as “an important milestone” even as other offshore developers were warning of delays due to rising costs..And despite nearly a trillion dollars in US government tax breaks and subsidies for renewables, Orsted warned it just isn’t enough..“Our continued discussions with senior federal stakeholders about additional (investment tax credit) qualifications… are not progressing as we previously expected. We continue to engage in discussions with federal stakeholders to qualify for additional tax credits beyond 30%. If these efforts prove unsuccessful, it could lead to impairments,” it said in a statement..Furthermore, US long-dated interest rates have increased, which affects both its US offshore and onshore projects. If the interest rates remain at the current level by the end of third quarter, it will cause further impairments, it added..The news caused its shares to plummet to their lowest level since it listed on the Copenhagen Stock Exchange in 2016, shedding some US$7 billion in market capitalization..Ironically, it had previously been Denmark’s state-owned oil and natural gas company before it sold off all its petroleum assets to focus exclusively on renewable energy. It operates a third of the planet’s offshore wind power, excluding mainland China..The company is also reportedly facing financial issues with projects in the UK and the EU.. Offshore wind CanadaProposed offshore wind locations in Canada. .Although Canada doesn’t presently have any offshore wind power, at least five proposals are on the books including four in the Maritimes and one off the West Coast.
