“Offshore Wind in U.S. Is Fundamentally Broken,” Says Top Industry Leader
Tuesday, November 07, 2023
BP's top renewables executive said last week that the U.S. offshore wind industry is "fundamentally broken.” The offshore wind industry is supposed to be an economic engine for Rhode Island's economy of the future.
At the beginning of the year, Maryland, Virginia, Massachusetts, Rhode Island, Connecticut, New York, and New Jersey had planned more than 17 gigawatts of offshore wind projects under contract; now, about two-thirds of that production has been canceled, according to reports.
In Rhode Island, the smaller of two significant offshore wind projects moved forward last week. At least for now, the Revolution Wind project is still in development. In July, Pennsylvania-owned Rhode Island Energy (RIE) rejected the bid by Ørsted and Eversource to build a larger offshore wind project off the coast that would have generated 884-MW.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTREI is owned by Pennsylvania, Power and Light (PPL). That now failed project -- named Revolution Wind 2 -- is now dead.
And now, there is a long way still to go to realize any additional projects.
The big question is the overall viability of the industry. Just two years ago, the offshore wind project looked to be an environmental, energy, and economic powerhouse to serve as a climate change solution and economic engine.
"Fundamentally Broken"
But what a couple of years make. Now, BP's renewables top executive Anja-Isabel Dotzenrath has proclaimed that the U.S. offshore wind industry is "fundamentally broken.”
BP and its partner Equinor abandoned a significant project off the coast of New York and wrote down $840 million in project costs.
As GoLocal reported last Wednesday, Ørsted, the world's largest offshore wind developer, killed two major projects off New Jersey.
Then, the company announced write-downs of up to $5.6 billion after halting the development of the projects.
The weeks of chaos and uncertainty have sparked an industry leader to issue a condemning comment.
Dotzenrath, BP's head of gas and low carbon, said that problems in the United States include permitting, the time lag between signing power purchase agreements and projects being built, and a lack of inflationary adjustment mechanisms.
"Ultimately, offshore wind in the U.S. is fundamentally broken," Dotzenrath told an FT Energy Transition conference in London. "There is a fundamental reset needed in the speed of permitting, security of permitting, etc."
She added that BP and Equinor are studying a new 10-point proposal by U.S. regulators that would allow the companies to re-bid for projects in an "accelerated" process.
This unraveling has major ramifications. It is a blow to Rhode Island's effort to transform its economy and build a new industry. In Washington, offshore wind energy was a major component of President Joe Biden's response to climate change.
In Rhode Island, Millions Are Being Spent to Support the Industry
In April, Governor Dan McKee highlighted on a tour of Quonset that the General Assembly allocated $60 million in American Rescue Plan Act (ARPA) funding to the Port in 2022 to assist in the development of the state’s only public port, continuing Davisville’s evolution as a key hub for the offshore wind industry in the North Atlantic.
Tens of millions in additional federal grants have poured into both Quonset and ProvPort, all in hopes of setting up Rhode Island as a player in the offshore wind industry.
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