Offshore wind, an extremely expensive generating technology, has had a number of problems getting off the ground along the U.S. Atlantic coast, including supply chain problems, inflation and high interest rates that have led to cancellations, delays, fees and an expected halving of Biden’s goal of 30 gigawatts of offshore wind by 2030. Undaunted, the Biden administration is now preparing a five-year lease plan that would include turbines in the far reaches of the Pacific. The plan calls for as many as 12 auctions through 2028 in the Atlantic, Gulf of Mexico and the waters off U.S. territories in addition to near Hawaii. The leasing schedule outlines four potential offshore lease sales in 2024, one each in 2025 and 2026, two in 2027, and four in 2028.
Biden’s Interior Department has held four offshore wind auctions since the start of the Biden administration with only one bid in the Gulf of Mexico due to challenges in the Gulf due to lower wind speeds, soft soils and hurricane activity. So far, the Department of the Interior has approved the nation’s first eight commercial scale offshore wind projects, approving over 10 gigawatts of offshore wind projects, but only a small fraction of that is currently operating. In fact, America’s first commercial-scale offshore wind facility (South Fork Wind) officially opened in mid-March 35 miles east of Montauk Point, New York. The 12-turbine 132-megawatt offshore wind facility was built by Danish wind energy developer Ørsted and the utility Eversource.
Biden has been doing everything possible, regardless of the impacts on taxpayers, to push his offshore wind agenda. This includes waiving financial responsibility for decommissioning costs, proposing gutting federal environmental laws for offshore wind that apply to other enterprises, and pouring taxpayer money into the offshore with the result of much more expensive electricity for Americans.
Developers are facing geography-specific challenges in scaling the industry in many of the U.S. offshore areas. The federal government has leased two areas off the California coast for wind farms, but siting more could be difficult. The depth of Pacific waters make it impossible to install conventional turbines in the ocean floor, while a string of marine sanctuaries along the state’s central coast has placed most of the region off limits to developers.
The Biden Administration’s previous offshore wind plan was to hold up to seven new offshore wind lease sales by 2025, including in waters in the Gulf of Maine, New York Bight, Central Atlantic, and Gulf of Mexico, as well as offshore the Carolinas, California, and Oregon, as part of its goal of deploying 30 gigawatts of offshore wind by 2030. Similar to that plan, the new offshore wind energy leasing plan for the next five years includes sales in regions like Central Atlantic, Gulf of Maine, Gulf of Mexico, Oregon, New York Bight, California, and Hawaii.
While the new offshore wind leasing plan is holding up to 12 lease auctions, the Biden Administration has scaled back offshore oil and gas leases. The current 5-year plan for offshore oil and gas includes just three lease sales, the lowest since the government began publishing the schedules in 1980. Those three lease sales were forced upon the Administration by Senator Manchin, who required them in the Democrat-passed Inflation Reduction Act in order for offshore wind lease sales to be held in the Gulf of Mexico. Instead of waiving financial responsibility for decommissioning structures as he did for Vineyard Wind off Massachusetts, Biden has raised the financial responsibility dramatically for oil and gas operations offshore.
New York Cancels Offshore Wind Projects
Recently, three New York offshore wind projects were canceled in the latest sign of trouble for the industry and President Biden’s “green” energy agenda. The New York State Energy Research and Development Authority (NYSERDA), the agency that handles offshore wind contracts, decided to not finalize power purchase agreements with three developers that received conditional awards from the state in October 2023. The announcement amounts to a cancellation of the projects, which deals a blow to New York’s goal to reach 70 percent “green” energy generation by 2030 and Biden’s offshore wind goal, and leaves the state wondering where its power will come from given the closure of nuclear power and fossil energy plants within the state.
Those bids were linked to major supply chain investments by General Electric and a larger turbine it planned to build. In February, it was determined that GE did not plan to move forward with an 18-megawatt turbine, which was the main reason no final awards were made. A smaller turbine would result in more individual turbine locations needed to deliver the same power — and the costs would have been higher since each site requires enormous amounts of cement and steel.
The projects affected are the 1,404-megawatt Attentive Energy One project being developed by TotalEnergies, Rise Light and Power and Corio Generation; the 1,314-megawatt Community Offshore Wind project developed by RWE Offshore Renewables and National Grid Ventures; and the 1,314-megawatt Excelsior Wind developed by Vineyard Offshore with backing from Copenhagen Infrastructure Partners. They would now need to rely on smaller 15.5-megawatt turbines. The developers would have needed to buy more turbines and install more massive underwater foundations to put each turbine atop, adding time and labor costs to each project.
New York awarded the three projects after the state Public Service Commission (PSC) rejected a request for higher prices from other developers last fall, which constrained NYSERDA’s negotiations: no price increases for competitively awarded projects. Several other projects were canceled following the PSC’s rejection, with similar dynamics playing out in other blue states like New Jersey and Maryland in recent months as well. In Maryland, Ørsted backed out of the Public Service Commission’s orders approving the company’s Skipjack 1 and 2 projects off the Maryland coast due to inflationary pressure, high borrowing costs and supply chain problems that have combined to make the state’s subsidies economically unviable.
Conclusion
The Biden administration has produced a new 5-year offshore wind lease plan that includes up to 12 lease sales, including areas in the far reaches of the Pacific. That plan was formulated despite cancellations occurring to offshore wind projects in the Atlantic that have a far better chance of succeeding. Offshore wind is very expensive—3 times the cost of onshore wind—and is being hampered by supply chain problems, inflation and high borrowing costs. The industry Is having trouble despite the availability of generous tax credits contained in the Inflation Reduction Act. Projects and contracts that appeared lucrative and viable around the time that Biden signed the bill into law are now being cancelled. Three offshore wind projects were recently canceled off New York as well as others off the coasts of New Jersey and Maryland as they face high costs and regulatory hurdles along with the concern of higher bills for utility customers. U.S. consumers should be grateful that Biden’s 2030 target for offshore wind continues to fall further out of reach.
