Biden’s offshore wind goal slips out of reach as projects struggle

(Reuters) – President Joe Biden’s goal of installing 30,000 megawatts of offshore wind power along U.S. coasts this decade to combat climate change may be unattainable due to rising costs and supply chain delays, according to forecasters and industry insiders.

The 2030 target, announced shortly after Biden took office, is central to Biden’s broader plan to decarbonize the U.S. economy by 2050. It is also crucial to the goals of the Northeast states that hope wind will help them along the way will help move away from fossil fuel-powered electricity.

“That doesn’t mean there can’t still be excellent advances in this technology that will do great things for our country,” said Kris Ohleth, director of the Special Initiative on Offshore Wind, an independent organization that provides advice and research on the Industry.

“By 2030 it just won’t be as big. At this point it’s pretty clear.”

In recent months, rising material costs, high interest rates and supply chain delays have led project developers including Orsted, Equinor, BP, Avangrid and Shell to cancel or renegotiate power contracts for the first commercial U.S. wind farms with operational start dates between 2025 and 2028.

The companies remain committed to the projects with a total output of more than 6,000 megawatts. However, delays occurred due to the need to secure new contracts and secure specialized equipment in demand worldwide.

“The U.S. will not reach the 30 GW target by 2030,” Samantha Woodworth, North American wind analyst at Wood Mackenzie, said in an email, citing “recent upheavals.” The energy research firm expects 21 GW of offshore wind power on U.S. coasts in 2030 and the 30 GW mark by 2032.

Developers have been expressing their first doubts since this summer.

“Thirty gigawatts is unfortunately not what developers are really aiming for at the moment,” said Michael Brown, U.S. country manager for Ocean Winds, an offshore wind joint venture between France’s ENGIE and Portugal’s EDP Renovaveis, at a Reuters event conference in July. “We want to achieve the highest possible gigawatt target, but we will not be able to achieve this 30 GW.”

Ocean Winds spokeswoman Kelly Penot-Rousseau declined to comment on Brown’s comments this week. But in the two months since his speech, U.S. industry has suffered a series of additional setbacks.

Last month, an Ocean Winds Shell project, SouthCoast Wind, agreed to pay $60 million to terminate contracts with Massachusetts utilities.

The same week, Orsted warned that there could be $2.3 billion in impairments on three U.S. projects and that the industry largely remained silent on a sale of offshore wind farm leases in the Gulf of Mexico by the Biden administration . White House spokesman Michael Kikukawa said the administration is “using every tool available under law to advance America’s offshore wind energy capabilities and achieve the goal of 30 GW by 2030.” He noted that industry investment increased by $7 .7 billion has risen since Biden signed the Inflation Reduction Act last year, which provides tax credits for clean energy.

Still, offshore wind developers, including Orsted, have said IRA subsidies are not enough to make projects successful in the current environment and are lobbying the government for additional concessions.

Installing 30 GW of offshore wind energy by 2030, enough to power 10 million American homes, was an ambitious goal that instilled confidence in the market that the U.S. was serious about offshore wind energy, after Europe and Asia lagged behind for years.

The country currently has only two pilot-scale offshore wind farms capable of generating 42 megawatts of electricity.

In a 2022 U.S. Department of Energy report, only one of two independent forecasts predicted that the U.S. would have at least 30 GW of offshore wind energy by 2030. In this year’s report, released last month, 2030 forecasts from market research firms 4C Offshore and BloombergNEF were reduced to 26.6 GW and 23.3 GW, respectively.

According to the DOE report, these levels are behind installation projections for countries such as China and the United Kingdom over the next decade.

DOE spokesman Samah Shaiq said the 2030 target is “still within reach” and the speed of development will depend on the efficiency of regulation, the availability of ships and port infrastructure, network planning and new turbine technology.

The government is working on initiatives to address these issues, Shaiq added.

Northeastern states like Massachusetts, New Jersey and New York need wind power to meet ambitious goals. New York, for example, has set a goal of supplying 70% of its electricity grid with renewable energy by 2030.

“The real reason the Biden administration was able to set 2030 targets for offshore wind energy is in the northeastern states of the U.S.,” said Doreen Harris, president of the New York State Energy Research and Development Authority (NYSERDA), which oversees the State’s offshore wind energy mandate implements 9 GW by 2035.

NYSERDA warned the state energy regulator last month that delays in offshore wind deployment could jeopardize that goal and called on the New York State Department of Public Service to approve price increases on contracts with Equinor, BP and Orsted.

Elizabeth Mahony, commissioner of the Massachusetts Department of Energy Resources, said she is confident about the future of offshore wind energy. According to the Executive Office of Energy and Environmental Affairs, the state has set a goal of securing 5.6 GW of offshore wind contracts by 2027, with 2.8 GW in operation by 2030. A spokesman for the New Jersey Board of Public Utilities said the state will continue to push to meet the state’s goal of 11 GW of offshore wind energy by 2040.

Stephanie McClellan, executive director of offshore wind energy advocacy group Turn Forward, said ensuring the first fleet of projects is successful is more important than a specific timeline.

“Attention needs to be focused on this,” she said. “Not what will happen in 2030.”

(Reporting by Nichola Groom; Editing by David Gregorio)

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