An international wind power company is pulling the plug on a major offshore wind development favored by the Biden Administration, the most recent in a series of offshore wind deals that have soured off the Atlantic Coast.
Ørsted, the world’s largest offshore wind power developer, announced the following this week: “US offshore wind projects have experienced further negative developments from adverse impacts relating to supply chains, increased interest rates, and the lack of an OREC (Offshore Renewable Energy Certificate) adjustment on Sunrise Wind…”
That combination of headwinds means the Danish energy company will be forced to scrap development on two wind power developments off the coast of New Jersey.
The company’s reported decent financial health, but that was overshadowed by substantial impairment losses totaling DKK 28.4 billion, primarily due to setbacks in its U.S. offshore projects.
The largest chunk, DKK 19.9 billion, was attributed to the Ocean Wind 1 project. These losses led to a net deficit of DKK -19.9 billion, and a return on capital employed (ROCE) at -14%. Excluding these losses, net profit and ROCE stood at DKK 8.5 billion and 13%, respectively.
In other words, Ørsted’s U.S. wind power projects are swimming in red ink.
And they’re not the only ones.
Earlier this year, Avangrid, the parent company of Central Maine Power, decided to cease operations off the coast of Massachusetts on its “Commonwealth Wind” project.
The project became so unprofitable that it made better financial sense for Avangrid to pay a $48 million cancellation fee rather that proceed with construction.
At the time, Shell and Ocean Winds North America were seeking similar arrangements for their offshore wind deals.
The developments in offshore wind economics are of great importance to Maine voters and taxpayers, as Gov. Janet Mills has made pushing for offshore wind the cornerstone of her administrations energy policy.
In one of the biggest policy fights of the most recent legislative session, Democratic lawmakers secured a deal to construct a large port on the Maine coast that will serve as the construction headquarters for offshore wind operations in the Gulf of Maine.
The plan has met with heavy resistance from groups that represent Maine fishermen and consumer advocates who claim that it will increase the cost of energy while providing little discernible environmental benefits.