Donald Trump’s suspension of offshore wind development permits delivered the fatal blow to an industry struggling with high costs, jeopardising the US’s power supplies and decarbonisation plans, executives warn.
More than 90 per cent of the country’s planned offshore wind projects, totalling more than 60 gigawatts, are at “serious risk”, said consultancy Rystad Energy. While Britain, for instance, has offshore wind capacity of 14GW, the US has less than 0.2GW. And unlike other renewable energy sources, the American sector relies on the federal government for permit approvals.
“[Trump] accelerated the death of the industry,” said Artem Abramov, head of clean tech at Rystad.
On his first day in office, the president paused leases and permits for offshore wind and ordered reviews of approved projects. His re-election has sent a chill across the industry, prompting leading developers to reduce or halt their US ventures. Last week, Vineyard Offshore, a US developer backed by Copenhagen Infrastructure Partners, eliminated 50 jobs, citing “recent market uncertainties”.
The US offshore wind sector has been pummeled by more than two years of high interest rates and inflation, prompting developers to cancel and renegotiate contracts. Ørsted, the largest wind developer, called its projects in the US as the “most painful” part of its portfolio in 2023.
Shell last month exited the Atlantic Shores Offshore Wind project, the only federally approved project in New Jersey, taking an almost $1bn write-off days after Trump posted on Truth Social that “hopefully the project is dead and gone”. TotalEnergies also said it was “not worth” pursuing US offshore wind projects for the next four years.
Trump’s pause on offshore wind projects poses a threat in particular to the clean energy goals and grid stability for the east coast of the US, industry participants warned, citing limited land and growing power demand from artificial intelligence data centres, electric vehicle charging and manufacturing.
“It’s just really tough to produce these electrons in other ways,” said Hillary Bright, executive director at Turn Forward, a non-profit organisation supporting offshore wind development. “You really start to wonder, where are those electrons going to come from if the rug is really pulled out?”
Robert Blue, head of Dominion Energy, a utility serving Loudon County, Virginia, the world’s data centre capital that is building the country’s largest offshore wind project, warned stopping development “would be the most inflationary action” for the state’s energy sector.
Developers said Trump’s pause sends a negative signal about the country’s investment stability. More than $40bn has been invested in the US offshore wind sector, according to Oceantic Network, a non-profit organisation. BloombergNEF, a consultancy, reckons European companies back more than half of advanced US offshore wind projects.
Despite subsidies, offshore wind is one of the most expensive sources of US electricity. It costs between $74 and $139 per megawatt-hour, compared with $45 to $108 per megawatt-hour for gas-fired power plants, according to Lazard’s Levelized Cost of Energy, a metric to weigh the cost of different sources.
Several executives told the Financial Times that economics, not policy, were behind decisions to shelve plans or prioritise other sources.
“We think we were probably not the best builder of offshore wind,” said Brian Savoy, chief financial officer at Duke Energy, which secured a lease off North Carolina’s coast in a 2022 auction. Progress on the lease has been minimal, and Savoy said the company needed “clarity” before launching the project.
“The economics are first and foremost what we look at for our customers, and we need to ensure that we clear that hurdle before we address any others.”
Patricia Poppe, chief executive of Pacific Gas and Electric, the country’s largest utility, said the company had “no plans” to build offshore wind projects, saying “there’s lower cost means of serving our customers’ demand”.
Scott Strazik, chief executive of GE Vernova, the country’s largest manufacturer of wind turbines, said Trump’s action on offshore wind “doesn’t change growth expectations from where we were”.
“We’ve been very clear for quite a given time that we’re not taking new offshore wind orders until they’re with materially different economics than the economics that we see today,” he added.
