The U.S. offshore wind trade is eying a brighter 2024, with work anticipated to begin on a number of initiatives following a 12 months marked by stalled developments and billions of {dollars} in write-offs.
The offshore wind trade is predicted to play a significant function in serving to a number of states and U.S. President Joe Biden meet objectives to decarbonize the facility grid and fight local weather change.
However progress slowed in 2023 after offshore builders canceled contracts to promote energy in Massachusetts, Connecticut and New Jersey, and threatened to cancel agreements in different states, as hovering inflation, rate of interest hikes and provide chain issues elevated challenge prices.
European power firms Orsted, Equinor and BP took a couple of mixed $5 billion in writedowns on U.S. offshore wind initiatives that had been in improvement as a result of present energy gross sales contracts wouldn’t cowl the price of constructing and financing the initiatives.
Subsequent 12 months, builders hope to revive initiatives with canceled or threatened energy gross sales contracts by bidding their amenities in upcoming solicitations in a number of states, together with New York, New Jersey, Massachusetts and Connecticut.
“Whereas public sale clearing costs could enhance, states seem to stay dedicated to scrub power objectives,” stated Eli Rubin, senior power analyst at power consulting agency EBW Analytics Group.
There have been solely two small offshore wind initiatives working within the U.S. firstly of 2023, one in Rhode Island and one other in Virginia, with complete capability of simply 41 megawatts (MW). Capability is about to leap to virtually 1,000 MW in 2024 as commercial-scale initiatives off New York and Massachusetts enter service.
One thousand megawatts of offshore wind can present energy to round 500,000 U.S. properties.
“State procurements and insurance policies will proceed to drive demand for offshore wind power and federal assist will allow extra job creation, provide chain funding and home power manufacturing,” stated Ryan Ferguson, spokesman at Danish power firm Orsted.
State assist
New York final month launched a solicitation that allowed firms to exit previous contracts and re-offer initiatives at larger costs. It’ll announce winners of an expedited solicitation for offshore wind in February.
The state accelerated the solicitation in October after a number of builders, together with Orsted, BP and Equinor, threatened to cancel contracts to promote energy that had been awarded in 2019 and 2021 earlier than the Federal Reserve began climbing rates of interest in March 2022 to battle hovering inflation.
New York’s first offshore wind farm, Orsted’s 132-MW South Fork supplied first energy in December.
In New Jersey, Governor Phil Murphy directed state utility regulators in November to launch an accelerated offshore wind solicitation in early 2024 after Orsted, the world’s largest offshore wind firm, canceled its two Ocean Wind initiatives.
Elsewhere in New Jersey, Shell and France’s EDF proceed to develop the 1,510-MW Atlantic Shores wind farm, which ought to produce energy by 2027-2028, based on the challenge’s web site.
In Virginia, U.S. power firm Dominion Vitality stated its roughly $10 billion, 2,587-MW Coastal Virginia Offshore Wind challenge remained on price range and on monitor to begin offshore building in Might 2024. First energy is predicted within the second half of 2025 and completion is about for late 2026.
In Massachusetts, Avangrid (AGR.N) and Copenhagen Infrastructure Companions’ 806-MW Winery Wind 1 challenge is on monitor to supply first energy within the close to future.
Avangrid, which canceled contracts to promote energy from initiatives off Massachusetts and Connecticut in 2023, stated it plans to re-bid its 1,232-MW Commonwealth Wind off Massachusetts and 804-MW Park Metropolis off Connecticut in future solicitations.
“What you are going to see in 2024 is quite a lot of aggressive bids that can result in contracts that can allow initiatives to go ahead,” stated Ken Kimmell, chief improvement officer for offshore wind at Avangrid.
Avangrid is majority owned by Spanish power firm Iberdrola.
Orsted, in the meantime, stated it plans to begin offshore building within the spring of 2024 on its roughly $4 billion Revolution Wind challenge, which is able to provide 704 MW to shoppers in Rhode Island and Connecticut.
(Reuters – Reporting by Scott DiSavino, Modifying by Rosalba O’Brien)
