Wind power takes billion dollar hit with stoppage of two projects

Two megawatt offshore wind projects slated for development in the Unites States have been scrapped after the Danish multinational energy company Ørsted said rising interest rates, high inflation and supply chain issues were the cause. The impairments of the projects, Ocean Wind 1 and 2 located in New Jersey, will likely be as high as $5.58 billion, Reuters reported.

The cancellation of the projects are said to “affect President Joe Biden’s goal of 30 gigawatts of U.S. offshore wind capacity by 2030,” EcoWatch reported.

“While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry,” Michael Kikukawa, White House spokesperson, said.

The 2,248-megawatt projects were part of a “perfect storm” of problems that have negatively affected the offshore wind industry worldwide, Nipper said.

“The world has in many ways, from a macroeconomic and industry point of view, turned upside down,” Mads Nipper, CEO of Ørsted, said. “This industry does not need to be in a crisis. We are of the opinion that it all hinges on being realistic about [what] power prices need to be.”

He also said that the company should not have invested so much in the early stages of Ocean Wind 1.

“I want to be absolutely clear that we are taking away all learnings from this into future project development and timing for capital commitments,” Nipper said.

Nipper also said there needs to be a “reset” of the cost of offshore power.

Ørsted’s stock fell to its lowest value in six year down 22 percent to $37.71.