US offshore wind poised for success next year after turbulent 2023
US offshore wind poised for success next year after turbulent 2023
The U.S. offshore wind industry is anticipating a more promising 2024, with several projects set to commence after a year marked by halted developments and substantial financial write-offs. This industry is crucial in helping states and President Joe Biden achieve power grid decarbonization and combat climate change.
In 2023, progress slowed as offshore developers terminated power sale contracts in several states due to increased project costs driven by factors like inflation, interest rate hikes, and supply chain disruptions. European energy companies, including Orsted, Equinor, and BP, collectively wrote off about $5 billion on U.S. offshore wind projects in development.
In the upcoming year, developers aim to revive projects with canceled or threatened power sale contracts by participating in solicitations in states such as New York, New Jersey, Massachusetts, and Connecticut. Although auction prices may rise, states remain committed to clean energy goals, according to Eli Rubin, a senior energy analyst.
At the beginning of 2023, only two small offshore wind projects were operational in the U.S., with a total capacity of 41 megawatts. However, capacity is expected to surge to nearly 1,000 megawatts in 2024 as commercial-scale projects off New York and Massachusetts come online.
State procurements and policies are anticipated to drive demand for offshore wind energy, with federal support enabling job creation, supply chain investment, and domestic energy production, as noted by Ryan Ferguson, a spokesperson for Orsted.
New York recently initiated a solicitation that allows companies to re-offer projects at higher prices, with winners to be announced in February. New Jersey is accelerating its offshore wind solicitation in early 2024 after Orsted canceled two Ocean Wind projects.
In Virginia, Dominion Energy’s Coastal Virginia Offshore Wind project remains on budget and on track, with offshore construction scheduled to begin in May 2024.
Massachusetts will see the Vineyard Wind 1 project producing first power soon, while Avangrid plans to re-bid its Commonwealth Wind and Park City projects in future solicitations. Orsted is set to start offshore construction in spring 2024 on its Revolution Wind project, supplying 704 MW to consumers in Rhode Island and Connecticut.
