November 7, 2023

Rough Seas Ahead for Offshore Wind

The abrupt cancellation of a couple of massive wind projects bodes ill for the industry’s future.

Last year, the Biden administration fooled enough lawmakers to pass the deceitfully named Inflation Reduction Act, which was more of a Mini Green New Deal in disguise. Within it were the makings of, among other things, an administration plan to have 30 gigawatts of electricity harvested from wind power by the year 2030.

Prior to that, however, there were already several offshore wind projects in the planning stages. Two of the most important ones were slated for construction off the coast of New Jersey by the Danish company Ørsted — projects that were slated to create nearly 200 wind turbines over a vast 250-square-mile swath of the Atlantic Ocean in a territory that came as close as nine miles offshore. The first project, dubbed Ocean Wind I, had just been approved by the Biden administration in July despite local opposition.

But a funny thing happened on the way to green energy independence: Last week, Ørsted abruptly canceled the plans for Ocean Wind 1 and 2. Citing the uncertainty of a supply chain and high interest rates, the company pulled the plug on the project while still trying to get out of a $300 million guarantee promised to New Jersey if the project didn’t go forward. That’s small potatoes compared to the $4 billion Ørsted was writing off when it stopped working on the deal, though, and as Andrew Stuttaford writes at National Review, the Dutch company isn’t the only one feeling the heat: Siemens Energy and BP are also questioning their continued involvement in various projects, both here and abroad. Those companies again blame the economic, er, headwinds of supply chain issues and high interest rates, although Siemens also notes its competition from China.

The demise of Ocean Wind 1 and 2 also egged the face of New Jersey Democrat Governor Phil Murphy, who had just signed a deal that would have allowed Ørsted to keep its tax credits for the project rather than use them to give ratepayers relief. As The Wall Street Journal eloquently put it: “Phil Murphy huffed and he puffed, and a giant wind boondoggle blew the New Jersey Governor down. That’s the story of another failed green-energy project, as the follies keep being exposed.”

Yet continued failure of government-favored industries can only mean one thing: a bailout. Several Democrat governors with offshore wind-energy projects in their jurisdictions recently penned a letter to the Biden administration begging for assistance. “Without federal action,” complained the governors of Connecticut, Maryland, Massachusetts, New York, and Rhode Island, “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. Absent intervention, these near-term projects are increasingly at risk of failing.” In other words, it’s time for taxpayers to start paying through the nose for “free” wind energy.

Kevin Dayaratna, a senior research fellow and data analyst for The Heritage Foundation, deserves the last word on the argument. “If wind power is as great as advocates claim it is, then it should not need a federal bailout. These discussions about potentially bailing out the wind industry merely illustrate the industry’s incapability of being a reliable form of energy that can stand on its own.”

These are rough seas for offshore wind, whether it’s the high costs, the lack of reliability (as fossil-fueled backup sources of power need to be on standby), or the intrusion of thousand-foot towers and blinking nighttime lights on oceanside vistas. And those most affected are the ones with the deepest opposition.

The question is: Will Joe Biden and his Green New Dealers take “no” for an answer?

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