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Released January 10, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. offshore wind power industry seems to take three steps backward for each step forward.
The most recent piece of bad news came this week when U.S. utility Eversource Energy (NYSE:ES) (Hartford, Connecticut) said it will take an asset impairment charge of up to $1.6 billion as it seeks to sell its 50% interests in three offshore Atlantic Ocean windfarms: Revolution (704 megawatts [MW]), South Fork (132 MW) and Sunrise (924 MW). Eversource's partner for all three projects is Danish energy giant Orsted A/S (Fredericia, Denmark).
That news overshadowed two earlier pieces of good news: That two offshore windpower projects, the 806-MW Vineyard Offshore Windfarm project and the South Fork Offshore Windfarm, sent small amounts of first power to their respective shores in Massachusetts and New York. Both windfarms remain under construction.
Vineyard Offshore Wind is a joint venture between Avangrid Incorporated (NYSE:AGR) (Orange, Connecticut), a subsidiary of Iberdrola S.A. (Bilbao, Spain), and Copenhagen Infrastructure Partners (CIP) (Copenhagen, Denmark), an infrastructure investor in clean energy projects. The project sent 5 MW to the Massachusetts shore late on the evening of January 2. The two-phase project is scheduled to be completed in mid-2025. It's expected to cost about $1.6 billion.
The Vineyard project is located about 15 miles off the coast of Martha's Vineyard. When complete, it is expected to include 62 General Electric Haliade-X turbines, each rising about 800 feet out of the water and capable of generating 13 MW of electricity. For more information, see January 4, 2024, article - Offshore Vineyard Wind Project Delivers First Power to New England.
One month earlier, in December, the South Fork project delivered its first power to the Long Island shore. The project is located about 35 miles off the Long Island coast. That project, which is one of the three that Eversource is trying to sell, is expected to include about 12 wind turbines, each with generating capacity of about 11 MW. The $2 billion project has experienced numerous delays.
First power from the Vineyard and South Fork projects was the latest installment in the good news-bad news cycle gripping the U.S. offshore windpower industry. Prior to the Vineyard and South Fork projects delivering their first power, a series of other projects were cancelled or placed on hold. For more on that, see November 27, 2023, article - Is Biden's '30 by 30' Offshore Windpower Plan Still Attainable?
For example, on January 3, one day after Vineyard Wind delivered its power to New England, European energy major Equinor (NYSE:EQNR) (Stavanger, Norway) said it terminated development of the unbuilt Empire Wind 2 Project, a project with planned generating capacity of about 1,260 MW. Equinor was developing that project with BP (NYSE:BP) (London, England). The project was slated to be built southeast of Long Island, New York. It was scheduled to begin construction in mid-2027 and begin operating by yearend 2029. For more on that, see January 5, 2024, article - Another U.S. Offshore Wind Power Contract Cancelled.
In terminating the contract to sell power from Empire Wind 2 to the New York State Energy Research and Development Authority (NYSERDA) (Albany, New York), Equinor blamed "changed economic circumstances on an industry-wide scale and repositions an already mature project to continue development in anticipation of new offtake opportunities. The decision recognizes commercial conditions driven by inflation, interest rates and supply-chain disruptions that prevented Empire Wind 2's existing (offtake) agreement from being viable."
Development of Empire Wind 1, an 810-MW project, appears to be continuing. That project, valued at about $850 million, is scheduled to start construction this spring and be complete by yearend 2026.
Last October, Ørsted cancelled its Ocean Wind 1 and 2 projects, which were scheduled to be built off the coast of New Jersey, citing inflation, interest rates and a still-kinked supply chain. The two windfarms were scheduled to total about 2,248 MW of generating capacity. The company will take a write-off of as much as $5.6 billion for the Ocean Wind 1 and 2 projects.
"Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply-chain bottlenecks impacting our long-term capital investments," David Hardy, group executive vice president and chief executive officer Americas at Ørsted, said in a statement October 31. "As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2. We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy."
In the same October 31 announcement, Ørsted and Eversource Energy announced they reached a final investment decision (FID) to build the Revolution Offshore Windfarm, a $4.3-billion, 706-MW project whose construction is scheduled to begin this year. The project, located about 15 miles off the Rhode Island coast, is expected to be operating in 2025.
Last October, Avangrid cancelled plans to build the $2 billion, 804-MW Park City Windfarm off the coast of Martha's Vineyard, Massachusetts.
Last year, developers cancelled power purchase agreements (PPAs) for the planned Commonwealth Energy Offshore Windfarm and the SouthCoast Windfarm, both of which are slated to be built off the coast of Massachusetts. The projects have not been cancelled, however, because the developers are seeking other offtakers.
Other projects that are in limbo include:
By contrast, about 43 projects have been cancelled or placed on hold. The total investment value (TIV) of those projects is about $39 billion. Subscribers can click here for the list of project reports.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The most recent piece of bad news came this week when U.S. utility Eversource Energy (NYSE:ES) (Hartford, Connecticut) said it will take an asset impairment charge of up to $1.6 billion as it seeks to sell its 50% interests in three offshore Atlantic Ocean windfarms: Revolution (704 megawatts [MW]), South Fork (132 MW) and Sunrise (924 MW). Eversource's partner for all three projects is Danish energy giant Orsted A/S (Fredericia, Denmark).
That news overshadowed two earlier pieces of good news: That two offshore windpower projects, the 806-MW Vineyard Offshore Windfarm project and the South Fork Offshore Windfarm, sent small amounts of first power to their respective shores in Massachusetts and New York. Both windfarms remain under construction.
Vineyard Offshore Wind is a joint venture between Avangrid Incorporated (NYSE:AGR) (Orange, Connecticut), a subsidiary of Iberdrola S.A. (Bilbao, Spain), and Copenhagen Infrastructure Partners (CIP) (Copenhagen, Denmark), an infrastructure investor in clean energy projects. The project sent 5 MW to the Massachusetts shore late on the evening of January 2. The two-phase project is scheduled to be completed in mid-2025. It's expected to cost about $1.6 billion.
The Vineyard project is located about 15 miles off the coast of Martha's Vineyard. When complete, it is expected to include 62 General Electric Haliade-X turbines, each rising about 800 feet out of the water and capable of generating 13 MW of electricity. For more information, see January 4, 2024, article - Offshore Vineyard Wind Project Delivers First Power to New England.
One month earlier, in December, the South Fork project delivered its first power to the Long Island shore. The project is located about 35 miles off the Long Island coast. That project, which is one of the three that Eversource is trying to sell, is expected to include about 12 wind turbines, each with generating capacity of about 11 MW. The $2 billion project has experienced numerous delays.
First power from the Vineyard and South Fork projects was the latest installment in the good news-bad news cycle gripping the U.S. offshore windpower industry. Prior to the Vineyard and South Fork projects delivering their first power, a series of other projects were cancelled or placed on hold. For more on that, see November 27, 2023, article - Is Biden's '30 by 30' Offshore Windpower Plan Still Attainable?
For example, on January 3, one day after Vineyard Wind delivered its power to New England, European energy major Equinor (NYSE:EQNR) (Stavanger, Norway) said it terminated development of the unbuilt Empire Wind 2 Project, a project with planned generating capacity of about 1,260 MW. Equinor was developing that project with BP (NYSE:BP) (London, England). The project was slated to be built southeast of Long Island, New York. It was scheduled to begin construction in mid-2027 and begin operating by yearend 2029. For more on that, see January 5, 2024, article - Another U.S. Offshore Wind Power Contract Cancelled.
In terminating the contract to sell power from Empire Wind 2 to the New York State Energy Research and Development Authority (NYSERDA) (Albany, New York), Equinor blamed "changed economic circumstances on an industry-wide scale and repositions an already mature project to continue development in anticipation of new offtake opportunities. The decision recognizes commercial conditions driven by inflation, interest rates and supply-chain disruptions that prevented Empire Wind 2's existing (offtake) agreement from being viable."
Development of Empire Wind 1, an 810-MW project, appears to be continuing. That project, valued at about $850 million, is scheduled to start construction this spring and be complete by yearend 2026.
Last October, Ørsted cancelled its Ocean Wind 1 and 2 projects, which were scheduled to be built off the coast of New Jersey, citing inflation, interest rates and a still-kinked supply chain. The two windfarms were scheduled to total about 2,248 MW of generating capacity. The company will take a write-off of as much as $5.6 billion for the Ocean Wind 1 and 2 projects.
"Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply-chain bottlenecks impacting our long-term capital investments," David Hardy, group executive vice president and chief executive officer Americas at Ørsted, said in a statement October 31. "As a result, we have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2. We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy."
In the same October 31 announcement, Ørsted and Eversource Energy announced they reached a final investment decision (FID) to build the Revolution Offshore Windfarm, a $4.3-billion, 706-MW project whose construction is scheduled to begin this year. The project, located about 15 miles off the Rhode Island coast, is expected to be operating in 2025.
Last October, Avangrid cancelled plans to build the $2 billion, 804-MW Park City Windfarm off the coast of Martha's Vineyard, Massachusetts.
Last year, developers cancelled power purchase agreements (PPAs) for the planned Commonwealth Energy Offshore Windfarm and the SouthCoast Windfarm, both of which are slated to be built off the coast of Massachusetts. The projects have not been cancelled, however, because the developers are seeking other offtakers.
Other projects that are in limbo include:
- Garden State Offshore Windfarm, a two-phase, $2.8 billion, 650-MW project that has been on hold for several years. That project is being developed by Orsted and a unit of Public Service Enterprise Group Incorporated (NYSE:PEG) (Newark, New Jersey). It is scheduled to be built off the coast of Cape May, New Jersey.
- Brownsville Offshore Windfarm, a 500-MW project valued at about $1.3 billion scheduled to be constructed in the Gulf of Mexico. That project was placed on hold in late 2021.
- Galveston Offshore Windfarm, a $340 million, 137-MW project that went on hold in 2021.
By contrast, about 43 projects have been cancelled or placed on hold. The total investment value (TIV) of those projects is about $39 billion. Subscribers can click here for the list of project reports.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
