Orsted CEO Says U.S. Offshore Wind Targets Not Out of Reach - gCaptain
Orsted CEO Says U.S. Offshore Wind Targets Not Out of Reach
By Scott DiSavino and Nichola Groom
Sept 18 (Reuters) – U.S. President Joe Biden’s plan to deploy 30,000 megawatts (MW) ofoffshore wind by 2030 is still possible, although not easy, the CEO of Orsted ORSTED.CO, the world’s largest offshore wind developer, said on Monday at the Climate Week NYC event in New York.
The remarks by Orsted CEO Mads Nipper come as soaring costs and supply chain delays have increasingly cast doubt on the Biden administration’s goal, a cornerstone of its plan to fight climate change. The Danish company said at the end of August that it may see U.S. impairments of $2.3 billion due to the market challenges.
Orsted Ready to Abandon U.S. Wind Projects Amid Challenges
“We’ve seen dark clouds gather,” Nipper said, noting that interest rates going from largely 0% to 4%, which is having a “very dramatic impact on renewables because the fuel of the renewable industry is capital.”
“We don’t need gas or oil or coal. It’s capital and that overnight has become significantly more expensive,” Nipper said.
Other challenges include “financially fragile” supply chains, “relatively uncertain policy frameworks,” and rising costs for “everything we need” from turbines to foundations and substations, Nipper said.
Policymakers and the industry need to accept that “for a little while the price of renewable power will have to go up, but we will bring it down again,” Nipper said.
Challenges Facing the U.S. Offshore Wind Industry
The Biden administration has passed lucrative subsidies aimed at helping companies build new offshore wind power capacity to help decarbonize the power sector and revitalize domestic manufacturing.
But offshore wind developers have said that certain tax credits in the Inflation Reduction Act, Biden’s landmark climate change law, are insufficient and are lobbying for less stringent rules around qualifying for the credits.
Last week, the governors of six Northeastern states urged Biden to direct his administration to take actions to support struggling offshore wind projects.
In a letter to Biden, the governors of Maryland, Connecticut, Massachusetts, New Jersey, New York and Rhode Island asked for leniency in qualifying offshore wind projects for new clean energy tax credits, speedier permitting, and the establishment of a program to direct a portion of the revenue generated by federal offshore wind leases to states.
“Without federal action, offshore wind deployment in the U.S. is at serious risk of stalling because States’ ratepayers may be unable to absorb these significant new costs alone,” the governors said in the letter.
Offshore wind is crucial to the targets of Northeast states who want to move away from fossil fuel-fired electricity. Many have mandates to install large amounts of the technology in the coming decade.
(Reporting by Scott DiSavino in New York and Nichola Groom in Los Angeles; Additional reporting by Shariq Khan; Editing by Mark Porter and Marguerita Choy)(c) Copyright Thomson Reuters 2023.
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Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.