Offshore wind developer Ørsted has delayed its New Jersey Ocean Wind 1 challenge to 2026. Beforehand, the corporate had introduced development of the challenge would start in October 2023. The delay was attributed to provide chain points, increased rates of interest, and a failure to this point to garner sufficient tax credit from the federal authorities. For now, they don’t seem to be strolling away from all their U.S. initiatives however will rethink long-term plans by the tip of this 12 months. Ørsted’s inventory worth has fallen 30% in 5 days. That is simply the newest unhealthy information for offshore win.
Ocean Wind 1 had one of many highest assured costs among the many 18 initiatives presently within the approval queue. The precise wholesale worth ensures for Ocean Wind 1 begin at $98.10/MWh, rising 2% a 12 months to $145.77. Over twenty years income will common $126.47/MWh based on the New Jersey Board of Public Utilities (BPU). Ørsted is in search of increased ensures from the BPU and a rise in federal Funding Tax Credit from 30% to 40%. Recognizing the potential monetary issues, New Jersey’s largest public utility, Public Service Electrical & Gasoline Firm bought its 25% share of the challenge to Ørsted in January.
The corporate mentioned it’s “reconfiguring” Ocean Wind II in New Jersey, and its Skipjack Wind challenge off the coasts of Maryland and Delaware as a result of they don’t presently meet its projected monetary requirements. The Maryland Public Service Fee assured Skipjack Wind $146.42/MWh common over twenty years and in addition will get to maintain income from gross sales to the regional grid. Apparently, the upper assure remains to be not sufficient to fulfill the corporate’s monetary targets. Ørsted is working to renegotiate assured costs on two different initiatives, Dawn Wind and Revolution Wind, that would want a 30% improve simply to fulfill the present Ocean Wind 1 assured worth.
In the meantime, initiatives off New York are asking for a mean 48% improve in assured costs that might add $880 billion a 12 months to electrical charges, or virtually $18 billion over twenty years (see desk beneath).
In North Carolina, the newest long-term vitality plan from Duke Vitality drops offshore wind fully in favor of nuclear, photo voltaic, and onshore wind. Moreover, Duke has dedicated to solely shut any present energy crops as soon as replacements are in operation, an concept that different states ought to observe. Two new offshore wind lease areas within the Gulf of Mexico failed to draw a bid. Winery Wind off Nantucket has begun development however faces three unresolved lawsuits.
Wind turbine producers are faring no higher. Siemens Gamesa has introduced virtually $5 billion in 2023 losses from guarantee repairs for generators a lot smaller than these deliberate within the US. The corporate additionally faces worth stress. The inventory worth has dropped 30% since June.
This isn’t the time for Delaware to be contemplating offshore wind.
Clearly, the trade is in disarray, going through rising prices, sturdiness, and authorized points. An 800 MW challenge comparable in measurement and the present assured worth to Skipjack 2 might increase Delaware residential electrical costs by $400 to $545/12 months and for companies by the tens of 1000’s. A Monmouth College ballot reveals a significant lower in public assist for offshore wind in New Jersey, falling from 84% to 54% with 40% opposed.
David T. Stevenson, Middle for Vitality & Environmental Coverage, Caesar Rodney Institute.
