This article is republished from Conversation under Innovative Commons license.
America’s first large-scale offshore wind farms started sending power northeast in early 2024, but a wave of wind farm project cancellations and rising costs have left many in doubt about the industry’s future in the U.S.
Some massive hitters including Ørsted, Equinor, BP and Avangrid have done it canceled contracts Or he tried to renegotiate them in recent months. The withdrawal meant that companies faced cancellation penalties ranging from $16 million up to several hundred million dollars per project. This also resulted in the fact that Siemens Energy, the world’s largest manufacturer of offshore wind turbines, expecting financial losses in 2024 approximately $2.2 billion.
Projects canceled by the end of 2023 were projected to total over 12 gigawatts of powerwhich constitutes more than half of the capacity expected under the projects.
So what happened, and can the U.S. offshore wind industry recover?
I direct the Lowell Center for Wind Energy Science, Technology and Research at the University of Massachusetts (WindSTAR) I Energy Innovation Centerand follow the industry closely. The offshore wind industry’s troubles are complicated, but there is no shortage of them in the U.S., and some policy changes could assist it get back on solid footing.
A cascade of approval challenges
Obtaining permits and approvals for offshore wind farm projects in the USA takes years and is fraught with uncertainty for developers, more so than in Europe or Asia.
Before a company bids on a U.S. project, the developer must plan to purchase the entire wind farm, including reserving purchases for components such as turbines and cables, construction equipment and ships. The bid must also be cost competitive, so companies tend to bid low and not anticipate unexpected costs, increasing uncertainty and financial risk.
Winning bidder from the USA buys an expensive ocean leasecosting in hundreds of millions of dollars. But there is no right to build a wind project yet.
Before construction begins, the developer must conduct a site assessment to determine this what foundations are possible and determine the scale of the project. The developer must finalize a contract for the sale of the energy it produces, identify the connection point to the power grid and then prepare a construction and operation plan, which is subject to further refinement environmental review. All this takes about five years, and this is just the beginning.
For the project to continue, developers may need security several dozen permits from local, tribal, state, regional and federal agencies. Federal Office of Ocean Energy Management, who has jurisdiction on seabed leasing and management, must consult with agencies that have regulatory responsibilities in relation to various aspects of the ocean, such as the armed forces, the Environmental Protection Agency and the National Marine Fisheries Service, as well as with groups covering commercial and recreational fishing, indigenous groups, shipping, port managers and property owners.