Are Canceled Wind Projects Hurting U.S. Goals?
Offshore wind energy has the potential to transform the U.S. energy landscape, but recent project cancellations have slowed progress. Learn what’s driving these setbacks and what they mean for future clean energy goals.
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Key Takeaways
Recent offshore wind project cancellations have created short-term setbacks for U.S. clean energy goals, largely due to economic pressures and supply chain challenges. Despite these delays, many projects remain in development, and industry interest continues to grow. Experts believe national targets are still achievable, though likely on a delayed timeline. Long-term investment and policy support are expected to keep offshore wind a key part of the energy transition.
- Offshore wind cancellations are slowing progress toward U.S. renewable energy targets.
- Inflation, supply chain issues, and rising costs are key drivers behind project delays.
- Active projects and new proposals signal continued industry growth and investment.
- Experts expect clean energy goals to be met, but on a delayed timeline.
The Effects of Slowing Progress on Offshore Wind Energy
Offshore wind production is the next great frontier for renewable energy in the United States. The National Renewable Energy Laboratory estimates that offshore turbines could generate three times the annual energy consumption of the entire country — all while reducing emissions. Numerous offshore facilities are in development; however, recent project cancellations have created delays that will impact the industry’s progress.
What Offshore Wind Projects Are Canceled?
In October 2023, the American offshore wind energy industry began to experience a significant slowdown. Shell Energy Ventures and Ocean Wind North America canceled SouthCoast Wind, followed quickly by the termination of two Avangrid projects: Park City Wind and Commonwealth Wind.
The same month, the Danish company Ørsted canceled two offshore wind energy projects: Ocean Wind 1 and 2. Both located off the coast of New Jersey, these facilities were expected to generate 1,100 megawatts and 1,148 megawatts, respectively. The company plans to keep its seabed lease and may revisit the project in the future.
Inland states have also been impacted by cancellations. The Icebreaker Wind project in Cleveland was put on hold in December 2023 due to financial concerns. The Lake Erie Energy Development Corp. (LEEDCo) hopes to move forward with the wind farm in the future.
Delays continued in April 2024, when the New York State Energy Research and Development Authority (NYSERDA) announced that it would be canceling the contracts for three projects: Attentive Energy One, Community Offshore Wind, and Excelsior Wind. All three had been given provisional awards after the state’s 2022 solicitation process.
Cancellations aren’t the only issue impacting wind energy in the United States. The industry faced another setback in July 2024, when a turbine blade at Vineyard Wind snapped. This offshore wind news made headlines as debris from the turbine washed up on Nantucket beaches. Prior to the accident, five of the planned 62 turbines were operational. While the Bureau of Safety and Environmental Enforcement (BSEE) has allowed certain installation activities to resume, power production is still paused as of September 2024.
The Active Offshore Wind Energy Projects
Despite the cancellations, a variety of wind energy projects are still moving forward. As of July 2024, there were a total of 37 wind-energy leases in states including Texas. In Virginia, Dominion Energy is actively developing the Coastal Virginia Offshore Wind. Construction began in May 2024 with expectations to finish in 2026.
Ørsted’s South Fork Wind project, which was completed in partnership with Eversource, achieved commercial-scale operation in March 2024. The company is continuing development on two other projects: Revolution Wind (Rhode Island) and Sunrise Wind (New York, Massachusetts, and Rhode Island). Ørsted is still in discussions regarding Skipjack Wind, a potential coastal wind energy project off Maryland.
Reasons for Project Cancellations
Economic factors such as high inflation have been behind many offshore wind cancellations, including Ørsted’s Ocean Wind 1 and 2. The Group President and CEO of Ørsted, Mads Nipper, cited “significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates.” In return for breaking its contract, Ørsted agreed to pay $125 million in a legal settlement with New Jersey.
Supply chain challenges also contributed indirectly to the cancellation of the New York wind energy projects. The original awards were based on GE Vernova’s proposed 18-megawatt turbines. When the manufacturer switched to a 15.5/16.5-megawatt platform to reduce supply chain risks, the power-generation gap proved insurmountable. Project developers also expressed concerns about the risks of using a single turbine supplier. The state, faced with the choice between falling short of energy goals or bearing the price increase of additional turbines, decided not to move forward with the final contracts.
Similar concerns led to the cancellation of the SouthCoast Wind, Park City Wind, and Commonwealth Wind developments. The disruptions due to rising prices, inflation, and supply chain issues were significant enough that the developers agreed to pay multimillion dollar termination fines rather than move forward.
Impact on Clean Energy Goals
Canceled wind projects have had a significant impact on clean energy goals at both the federal and state levels. The loss in expected power generation means that the country won’t meet the overarching goal set by the Biden-Harris administration in 2021 of 30 gigawatts of electricity generated by offshore wind energy by 2030. Considering current offtake agreements, the American Clean Power Association (ACP) estimates that wind energy facilities will be able to generate just 14 gigawatts by that date. However, analysts think it will take just 3 years longer to reach 30 gigawatts.
In New York, the canceled wind energy projects were a significant setback for the state’s ambitious climate goals. Under the New York Climate Act, officials plan to get 70% of New York’s electricity from renewable sources by 2030. Given energy load forecasts and the 4-gigawatt electricity-generation gap created by the canceled offshore projects, this target may now be pushed to 2033.
Industry and Government Responses
The string of canceled projects hasn’t reduced interest in offshore wind energy. The New York state government opened another offshore wind solicitation in July 2024; it closed on September 9, 2024, with 25 new project proposals from four developers. Other states and the federal government are also moving forward with solicitations and new offshore wind energy leases.
On the industry side, developers with canceled projects have continued to pursue offshore wind. Avangrid, in addition to its ongoing work on Vineyard Wind, submitted proposals for two new offshore wind projects in the 2024 Massachusetts-Connecticut-Rhode Island multi-state solicitation. It received federal construction approval for both projects in July 2024. The company is also proposing several other wind projects in other states.
Amid the ongoing optimism for offshore wind energy, industry experts are calling for supply chain stabilization to reduce costs, mitigate risks and prevent delays. Standardizing turbine sizes may help, particularly when it comes to building and maintaining the vessels that transport components to ocean construction sites. Many turbine manufacturers are streamlining their product selection to include models in the 11- to 15-megawatt range; in the long term, they may move toward larger, higher-capacity designs.
The Future Outlook for Offshore Wind Energy
Although the industry faces challenges, the future of wind energy is bright in the United States. Experts agree that if current projects proceed as planned, the offshore wind energy industry is on track to reach 30 gigawatts of electricity generation just 3 years behind schedule.
The Biden-Harris administration continues to express confidence in the process, approving its 10th commercial-scale project in early September 2024. These moves are motivated in part by the economic impact of wind energy — by stimulating investment in ports, shipbuilding, manufacturing, installation, maintenance, and transmission, offshore projects stand to create thousands of union jobs. Investors have poured about $17 billion into the offshore wind industry since 2014, a figure that’s expected to reach $22 billion by 2030.
Offshore wind generation also promises to benefit the environment. Compared to fossil fuels, wind energy is clean and low emission. Coal plants, for example, have a carbon footprint that’s nearly 90 times larger. Wind is renewable and continuous, but power generation can vary based on weather. As demand increases for sustainable electricity, offshore wind projects are likely to be a key part of national and global energy strategy.
Although canceled offshore wind energy projects have made headlines, they don’t appear to be a step backward. Developers, having adjusted to the economic and supply chain factors that drove the cancellations, continue to propose new projects. In fact, offshore wind could have an impact on electric rates in the coming decade.
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Michael McKelvey
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