Will Ørsted Bid for Next Round of Offshore Wind? Will Anyone? - GoLocalProv
GoLocalProv | Will Ørsted Bid for Next Round of Offshore Wind? Will Anyone?
Will Ørsted Bid for Next Round of Offshore Wind? Will Anyone?
Friday, September 29, 2023
Ørsted's David Ortiz PHOTO: GoLocal
REI is owned by Pennsylvania, Power and Light (PPL).
Since then, a lot has happened. And none of it may be good for Rhode Island to generate energy from renewable sources.
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A number of offshore wind projects in the region have unraveled, and then in August, the head of Ørsted North America reported that the company is reassessing its future in America.
On August 30, Ørsted announced it may see U.S. losses of $2.3 billion due to supply chain problems, soaring interest rates and a lack of new tax credits.
Orsted's share price tumbled 20% after the announcement to its lowest level in more than four years and is down almost 70% from its 2021 peak.
"The situation in U.S. offshore wind is severe," Chief Executive Mads Nipper told reporters on a conference call.
Fast Forward a Month
On Thursday, Governor Dan McKee announced that the state, via REI was going out to bid again. This was a shift by McKee who, on July 27th on GoLocal LIVE, said he was looking to begin a multi-state initiative with Connecticut and Massachusetts.
REI gave a lukewarm statement about the rebid.
“Rhode Island has big clean energy aspirations and Rhode Island Energy is committed to helping achieve them,” said Dave Bonenberger, President of REI. “This new procurement can help advance the state’s clean energy goals and support achievement of Rhode Island’s emissions-reduction targets. We look forward to seeing how offshore wind developers can balance those goals with affordability and wider economic benefits for the state.”
But Ørsted was more reserved about the news, and there is no guarantee that the Danish company or anyone else will bid to market conditions and regulatory obstacles/
David Ortiz, Ørsted’s Head of Government Affairs and Market Strategy for the Northeast, told GoLocal, “Ørsted evaluates all opportunities to expand our U.S.-leading offshore wind portfolio while creating good-paying local jobs and growing the U.S. supply chain.”
The reality is that Ørsted may look to bigger and more cost-efficient markets in New York or Massachusetts.
McKee is trying to create some optimism in a market that right now is facing tremendous obstacles.
“Offshore wind is critical in advancing Rhode Island’s 100 percent renewable energy standard and Act on Climate objectives,” said McKee. “It’s more important than ever that we continue to push for new opportunities to expand offshore wind generation in Rhode Island while ensuring it is affordable for future generations. Rhode Island Energy recognizes the need for urgency in bringing more renewables online and I’m appreciative of their efforts to get another offshore wind RFP released.”
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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.