At the close of October, Danish wind giant Ørsted shocked the industry when it declared that it is pulling the plug on its massive overseas projects in New Jersey, marking the latest in a series of challenges for the U.S. market. But while Ørsted is cutting back, Virginia energy Dominion Energy secured final approval for its staggering $9.8 billion Coastal Virginia project, the largest wind farm planned for U.S. waters.
These developments spotlight the unpredictable nature of offshore wind in the U.S. Despite hefty taxpayer funding at both the state and federal levels, the industry has been forced to significantly scale back over the last six months due to supply chain issues, rising costs, regulatory delays, and shifting dynamics for renewable energy, causing numerous major projects to be delayed or scrapped.
However, Dominion Energy remains resilient.
The 2.6-GW Coastal Virginia project is “continuing to progress on time and on budget,” stated Dominion president, chair and CEO Robert Blue at an October event noting the arrival of the first monopiles at the Port of Virginia.
Dominion’s success is attributed to regulatory favor, local support, bipartisan legislation in Richmond requiring 5.2 GW of offshore wind in state waters, and generous federal tax credits that have helped mitigate the company’s risk.
While none of this ensures that the project will actually be built and operational by 2026 as planned, or that the company and Virginia will achieve their clean energy goals, the success of Coastal Virginia Offshore Wind (CVOW) would provide a blueprint for the struggling industry at a time when the future of offshore wind in the United States is uncertain.
Year of dissolution
Soaring inflation and supply chain delays have halted or outright terminated development of a number of planned offshore wind farms in the U.S.
- Ørsted is backing out of the Ocean Wind I and II projects off the New Jersey coast, and will incur a $4 billion loss related to the projects.
- Three projects set to supply 3.2 GW to Massachusetts and Connecticut have also been shut down.
- Siemens Gamesa announced on Nov. 15 that it is suspending construction on the Portsmouth Marine Terminal, slated to deliver turbines for Dominion’s Coastal Virginia project.
- The industry is unlikely to meet the Biden administration’s target of having 30 GW of offshore wind in operation by 2030.
Altogether, nearly $22 billion in planned offshore wind development investment in the U.S. has been canceled or indefinitely delayed in recent months.
S&P Global Commodities Insights declared that it would revise its outlook for 2030 offshore wind capacity from its current 22 gigawatts projection, a figure already well below the Biden administration’s 30 GW goal.
The U.S. market is in its early stages compared to offshore wind development in Europe.
