Due to Wind Power rising interest rates, inflation, and supply-chain issues, the wind energy industry in the United States is experiencing a wave of impairments that is delaying projects and raising concerns about the future of the sector.
Governments everywhere have set high goals to raise the proportion of renewable energy in their energy mixes, but the rising costs of financing for wind developers are putting pressure on these plans.
In recent days, Orsted, BP, and Equinor have written off a combined $4.8 billion against offshore wind projects in the United States.
Orsted, a Danish renewable energy company, announced on Tuesday that it had written off the development of Ocean Wind 1 and 2, two wind projects off the coast of New Jersey, due to supplier delays and soaring costs. The impairment charge against Orsted’s U.S. offshore portfolio amounted to 28.4 billion Danish kroner, or $4.02 billion. Citing the lack of encouraging progress on tax credits, Orsted previously warned of rising risks for its projects in the nation.
Orsted Chief Executive Mads Nipper stated, “We have made this decision due to the significant adverse developments from supply-chain challenges, which have led to delays in the project schedule and rising interest rates.”
The decision was made one week prior to New Jersey’s legislative elections, where Republicans have made wind turbines their main target in opposition to Democratic Governor Phil Murphy’s goal of having all of the state’s electricity come from renewable sources by 2035.
According to Martin Tessier, vice president of equity research for utilities and renewables at Stifel, “the industry isn’t in a good shape.” “I anticipate an easing of long-term objectives…and over time, fewer projects will be developed.