Biden’s offshore wind goal is growing out of reach as projects struggle

By | September 15, 2023

By Nicola Sposo

(Reuters) – President Joe Biden’s goal of deploying 30,000 megawatts of offshore wind power along U.S. coasts this decade to fight climate change may be unattainable due to soaring costs and supply chain delays , according to meteorologists and industry experts.

The 2030 goal, unveiled shortly after Biden took office, is central to Biden’s broader plan to decarbonize the U.S. economy by 2050. It’s also crucial to the goals of Northeastern states that hope the wind energy helps them abandon electricity produced by fossil fuels.

“That doesn’t mean there can’t still be excellent progress toward this technology that will do great things for our nation,” said Kris Ohleth, director of the Special Initiative on Offshore Wind, an independent organization that provides advice and research to the industry.

“It just won’t reach that size by 2030. It’s pretty clear at this point.”

In recent months, soaring material costs, high interest rates and supply chain delays have led project developers including Orsted, Equinor, BP, Avangrid and Shell to cancel or seek to renegotiate energy contracts for first commercial-scale US wind farms with operational start dates between 2025 and 2028.

The companies say they remain committed to the projects, which have a combined capacity of more than 6,000 megawatts. However, the delays are due to the need to enter into new contracts and secure specialized equipment required around the world.

“The US will not reach the 30 GW target by 2030,” Samantha Woodworth, North American wind analyst at Wood Mackenzie, said in an email, citing “recent upheavals.” The energy research firm forecasts 21 GW of offshore wind power along US coasts in 2030, surpassing 30 GW by 2032.

Developers began raising concerns this summer.

“Thirty gigawatt hours is unfortunately not something that developers really aspire to,” said Michael Brown, U.S. country manager of Ocean Winds, an offshore wind joint venture between France’s ENGIE and Portugal’s EDP Renovaveis, at a Reuters Events conference in July . “We want to hit the highest gigawatt goal possible, but it’s not going to be possible to hit that 30 GW.”

Ocean Winds spokeswoman Kelly Penot-Rousseau declined to comment this week on Brown’s remarks. But in the two months since her speech, the U.S. industry has suffered a series of further blows.

Last month, an Ocean Winds-Shell project, SouthCoast Wind, agreed to pay $60 million to cancel contracts with Massachusetts utilities.

The same week, Orsted warned that he could see writedowns of $2.3 billion on three U.S. projects and that the industry largely failed to show up for the Biden administration’s sale of offshore wind leases in Gulf of Mexico. White House spokesman Michael Kikukawa said the administration was “using every legally available tool to advance America’s offshore wind opportunities and reach its goal of 30 GW by 2030.” He noted that industry investment has increased by $7.7 billion since Biden last year signed the Inflation Reduction Act, containing tax credits for clean energy.

However, offshore wind developers, including Orsted, have said IRA subsidies are insufficient for projects to thrive in the current environment and are lobbying the administration for further concessions.

setback in the United States

Installing 30 GW of offshore wind by 2030, enough to power 10 million American homes, was an aggressive goal that sparked market confidence that the United States was taking offshore wind seriously after years of lagging Europe and Asia.

The nation currently has only two pilot-scale offshore wind farms capable of producing 42 megawatts of electricity.

In a 2022 U.S. Department of Energy report, only one of two independent forecasts predicted that the United States would have at least 30 GW of offshore wind by 2030. In this year’s report, released last month, the 2030 forecasts from market research firms 4C Offshore and BloombergNEF have been reduced to 26.6 GW and 23.3 GW respectively.

According to the DOE report, these levels lag behind installation forecasts for nations like China and the United Kingdom over the next decade.

DOE spokesperson Samah Shaiq said the 2030 goal “is still within reach” and the speed of development will depend on regulatory efficiencies, the availability of ships and port infrastructure, network planning and new ship technology. turbines.

The administration is working on initiatives to address these issues, Shaiq added.

Northeastern states like Massachusetts, New Jersey and New York need wind energy to meet ambitious goals. New York, for example, has a goal of powering its grid with 70% renewable energy by 2030.

“The real reason the Biden administration might set 2030 goals for offshore wind is because of the northeastern states of the United States,” said Doreen Harris, president of the State Energy Research and Development Authority of New York (NYSERDA), which is deploying the state’s offshore wind energy. mandate of 9 GW by 2035.

NYSERDA last month warned the state’s utility regulator that delays in deploying offshore wind could threaten that goal and asked the New York State Department of Public Service to approve increases in price of contracts with Equinor, BP and Orsted.

Massachusetts Department of Energy Resources Commissioner Elizabeth Mahony said she is confident in the future of offshore wind energy. According to the Executive Office of Energy and Environmental Affairs, the state has a goal of acquiring 5.6 GW of offshore wind contracts by 2027, with 2.8 GW in operation by 2030. A spokesperson for the Board of Public Utilities of New Jersey said the state is moving forward with efforts to meet the state’s goal of 11 GW of offshore wind by 2040.

Stephanie McClellan, executive director of the offshore wind advocacy group Turn Forward, said making sure the first fleet of projects is successful is more important than a particular timeline.

“That’s where the focus needs to be,” he said. “That’s not what’s going to happen in 2030.”

(Reporting by Nicholas Groom; Editing by David Gregorio)

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