The U.S. offshore wind business is eying a brighter 2024, with work anticipated to begin on a number of initiatives following a yr marked by stalled developments and billions of {dollars} in write-offs.
The offshore wind business is predicted to play a significant function in serving to a number of states and U.S. President Joe Biden meet targets to decarbonize the ability grid and fight local weather change.
But 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 undertaking prices.
European vitality corporations 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.
Next yr, builders hope to revive initiatives with canceled or threatened energy gross sales contracts by bidding their services in upcoming solicitations in a number of states, together with New York, New Jersey, Massachusetts and Connecticut.
“While auction clearing prices may increase, states appear to remain committed to clean energy goals,” mentioned Eli Rubin, senior vitality analyst at vitality consulting agency EBW Analytics Group.
There had been solely two small offshore wind initiatives working within the U.S. in the beginning of 2023, one in Rhode Island and one other in Virginia, with complete capability of simply 41 megawatts (MW). Capacity is ready 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 policies will continue to drive demand for offshore wind energy and federal support will enable more job creation, supply chain investment and domestic energy production,” mentioned Ryan Ferguson, spokesman at Danish vitality firm Orsted.
State help
New York final month launched a solicitation that allowed corporations to exit previous contracts and re-offer initiatives at increased costs. It will 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 struggle hovering inflation.
New York’s first offshore wind farm, Orsted’s 132-MW South Fork offered 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, in response to the undertaking’s web site.
In Virginia, U.S. vitality firm Dominion Energy mentioned its roughly $10 billion, 2,587-MW Coastal Virginia Offshore Wind undertaking remained on finances and on monitor to begin offshore development in May 2024. First energy is predicted within the second half of 2025 and completion is ready for late 2026.
In Massachusetts, Avangrid (AGR.N) and Copenhagen Infrastructure Partners’ 806-MW Vineyard Wind 1 undertaking 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, mentioned it plans to re-bid its 1,232-MW Commonwealth Wind off Massachusetts and 804-MW Park City off Connecticut in future solicitations.
“What you’re going to see in 2024 is a lot of competitive bids that will lead to contracts that will enable projects to go forward,” mentioned Ken Kimmell, chief improvement officer for offshore wind at Avangrid.
Avangrid is majority owned by Spanish vitality firm Iberdrola.
Orsted, in the meantime, mentioned it plans to begin offshore development within the spring of 2024 on its roughly $4 billion Revolution Wind undertaking, which can provide 704 MW to customers in Rhode Island and Connecticut.
(Reuters – Reporting by Scott DiSavino, Editing by Rosalba O’Brien)
