A Danish offshore wind company with major projects in the U.S. has taken huge losses Wednesday after warning about its so-far unsuccessful effort to get more federal subsidies, according to Reuters.
Orsted stated Tuesday that it anticipates that its three developments in U.S. waters may be $2.3 billion less valuable than anticipated, in part because the firm is having trouble receiving more tax credits from the Biden administration, according to Reuters. Other problems the firm’s projects face include supply chain backups and rising interest rates that make refinancing difficult.
“The situation in U.S. offshore wind is severe,” Orsted’s CEO, Mads Nipper, said to reporters on a conference call, according to Reuters. The company may cut its losses and walk away from its U.S. portfolio, according to Windpower Monthly, a potential move which would be a major setback to the Biden administration’s offshore wind ambitions.
The company has already received subsidies for its offshore wind developments off the East Coast, but the firm’s discussions with high-level Biden administration officials to access even more tax credits have not gone as the company had hoped, according to Reuters. The firm’s share price has plunged by just under 25% Wednesday as of the time of publication, according to data from Yahoo Finance.
Orsted is involved in three offshore wind projects that are especially impacted: one off the Rhode Island coast, one off the coast of Massachusetts and one in the waters of southern New Jersey, according to Reuters.
The Biden administration is aiming to have offshore wind provide enough energy to power 10 million U.S. homes by 2030, according to the White House. Offshore wind is a key pillar of the administration’s broader goals of having the American power sector reach net-zero carbon dioxide emissions by 2035, and to have the overall U.S. economy reach net-zero by 2050.
The administration and other advocates of green technology have asserted that the East Coast offshore wind projects will also create thousands of union jobs, but a de facto pause or abandonment of construction on some of the planned developments would complicate those projected outcomes.
Orsted’s troubles and plunging share price are the latest sign that turbulence may await the American offshore wind industry. A Spanish firm building a project off the coast of Massachusetts paid nearly $50 million in fines to walk away from its stake in the project, which it no longer determined to be economically viable as it had when it first became involved.
Meanwhile, a Tuesday offshore wind lease sale for three zones in the Gulf of Mexico flopped, with two of the zones receiving zero bids from any of the numerous eligible companies that reportedly had some level of interest in the sales. The third zone received a total of three bids from two companies, and the final sale price stands as the lowest amount received for an offshore wind lease sale since the Obama administration was in office.