Large Developer RWE Exits U.S. Offshore Wind Market

Written by Jesse Broehl for Industrial Info Resources (Sugar Land, Texas)--Facing explicit opposition from the second Trump administration, companies in the U.S. offshore wind sector are making rational business decisions and pulling back from activities in the U.S.

The latest is RWE Renewables GmbH (Essen, Germany), which is ceasing all offshore wind activities in the U.S.

RWE is expected to continue its active and substantial development in solar and onshore wind in the U.S., where it is the third-largest renewable-energy plant owner, with more than 10 gigawatts (GW) of operating wind, solar and battery projects. Industrial Info is tracking 59 active RWE projects in the U.S., worth $14.89 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of detailed project reports.

RWE's position in the U.S. offshore wind market is not in operating assets, but in its potential to bring large projects online in coming years. There are only a few offshore wind projects in the U.S. in operation or under construction, and RWE does not own any of these plants.

RWE's key offshore wind assets are in its ownership of offshore wind site leases secured in recent years from the federal government, especially its lease site off New York and New Jersey. That is the site of RWE's lease area OCS-A 0539, which won a large 1.3-GW power offtake contract in 2023.

Residual Value of Offshore Wind Development Assets
It is largely a consensus view by developers and other stakeholders in the U.S. offshore wind industry that no offshore wind projects will receive federal permits to proceed toward construction during the Trump administration.

However, some developers may have the patience to wait out that period and revive the projects under a more supportive federal administration, assuming the lease positions remain contractually valid and commercially viable at a later date.

There is substantial residual value in RWE's assets that could be revived at a later date. It is not known at this point whether any underling equity positions in projects have changed since RWE's plan to cease U.S. offshore wind activity. For example, National Grid plc (NYSE:NGG) (London, England), the joint venture partner in RWE's New York adjacent lease site, may decide to pause, but not entirely discontinue development of that project.

More details of RWE's primary offshore wind assets are detailed in the following content:

RWE's Awarded Site Leases are its Key Assets
New York State Offshore: RWE's most valuable U.S. asset is its development position off New York and New Jersey in lease site OCS-A 0539. In February 2022, RWE secured the offshore lease area with a bid to the federal Bureau of Ocean Energy Management (BOEM) of $1.1 billion.

The awarded seabed is 37 miles off New Jersey and 64 miles off New York and has the potential to host about 3 GW of capacity. RWE partnered with National Grid on the project. The site is RWE's most valuable offshore wind position partly because the company secured a significant offtake contract of 1.3 GW in New York State's third offshore wind-power contract solicitation. That contract is now in serious doubt, but it is testament to the value of a site located close to New York and New Jersey's high energy demand and higher average electricity prices.

Gulf of Mexico Offshore: In August 2023, the U.S. Department of the Interior (DOI) held its first offshore wind lease auction for the Gulf of Mexico (since designated as the Gulf of America by the Trump administration). RWE secured Lease Area OCS-G 37334 with a bid of $5.6 million. RWE's awarded site is 44 miles off the coast of Louisiana and has water depths of 10 to 25 meters. The lease area has the potential to host up to 2 GW of new wind capacity. Subscribers to the GMI Project and Plant databases can click here for the project report (now listed as cancelled) and click here for the plant profile.

California Offshore: RWE was the winner in the DOI's first offshore wind lease auction off the California coast, and the first such U.S. auction of a site in deep waters that would require floating offshore wind technology. RWE won Lease Area OCS-P 0561 with a bid of $157.7 million. RWE's awarded site is 45 kilometers offshore in the Humboldt Bay off the north coast of California and has water depths of 723 meters. The lease area has the potential to host up to 1.6 GW of capacity. Click here for the project report (now listed as cancelled) and click here for the plant profile.

Although offshore wind is largely expected to be put on pause during the Trump administration, IIR Energy will continue to monitor these and other offshore wind project developments, underlying shifts in equity position, or other notable changes.

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) 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 more than 200,000 current and future projects worth $17.8 Trillion (USD).