This article is republished from The conversation under a Creative Commons license.
America’s first large-scale offshore wind farms started sending energy to the northeast in early 2024, but a wave of wind farm project cancellations and rising costs have left many people wondering about the future of the industry in the US.
Several heavy hitters, including Ørsted, Equinor, BP and Avangrid, have canceled contracts either sought to renegotiate them In recent months. The withdrawal meant that companies faced cancellation penalties ranging from $16 million to several hundred million dollars per project. It also led to Siemens Energy, the world’s largest manufacturer of offshore wind turbines, Anticipating financial losses in 2024. of around 2.2 billion dollars.
In total, the projects that had been canceled by the end of 2023 were expected to total more than 12 gigawatts of powerwhich represents more than half of the capacity in the project portfolio.
So what happened? Can the US offshore wind industry recover?
I direct the Lowell Center for Wind Energy Science, Technology and Research at the University of Massachusetts (windSTAR) and Energy Innovation Centerand closely monitor the industry. The offshore wind industry’s problems are complicated, but it is far from dead in the United States, and some policy changes can help it find firmer footing.
A cascade of approval challenges
Getting offshore wind projects permitted and approved in the US. takes years and it is full of uncertainty for developers, more so than in Europe or Asia.
Before a company bids on a U.S. project, the developer must plan the acquisition of the entire wind farm, including making reserves to purchase components such as turbines and cables, construction equipment and ships. The bid must also be cost competitive, so companies tend to bid low and not anticipate unexpected costs, increasing financial uncertainty and risk.
The winning American bidder then buy an expensive marine leasecosting in the hundreds of millions of dollars. But he still does not have the right to build a wind project.
Before beginning construction, the developer must conduct site assessments to determine what type of foundations are possible and identify the scale of the project. The developer must conclude an agreement to sell the energy it produces, identify an interconnection point to the electrical grid, to then prepare a construction and operation plan, which is subject to environmental review. All of this has been going on for about five years and it’s just the beginning.
For a project to move forward, developers may need to ensure dozens of permits from local, tribal, state, regional and federal agencies. The federal Office of Ocean Energy Management, that has jurisdiction Regarding seafloor leasing and management, you should consult with agencies that have regulatory responsibilities for different aspects of the ocean, such as the military, the Environmental Protection Agency, and the National Marine Fisheries Service, as well as groups that include fisheries. commercial and recreational, indigenous peoples. groups, shipping companies, port administrators and owners.