Biden's DOE announced that it was…
Massachusetts Institute of Technology researchers…
Ørsted is ceasing the development of two offshore wind projects in the United States due to supply chain delays and higher interest rates, the world’s biggest offshore wind developer said on Wednesday, which sent its shares plummeting by nearly 20% in Copenhagen.
Orsted warned in August that it could face up to $2.3 billion (16 billion Danish crowns) of impairments on its U.S. project portfolio due to supply chain delays, higher interest rates, and the possible inability to qualify for additional tax credits beyond 30%.
Now Ørsted says that it had taken the decision to cease the development of the Ocean Wind 1 and 2 projects, as a consequence of additional supplier delays and changed project assumptions including tax credit monetization and the timing and likelihood of final construction permits.
“Finally, increases to long-dated US interest rates have further deteriorated the business case,” Ørsted said in a statement.
The total impairments recognized in the interim financial report for the first nine months of 2023 amount to $4 billion (28.4 billion crowns), and the majority of these -- $2.8 billion (19.9 billion crowns) relate to Ocean Wind 1, Ørsted said.
Just yesterday, BP booked a pre-tax impairment charge of $540 million in the third quarter related to U.S. offshore wind projects as project developers are facing a challenging regulatory and business landscape.
For example, the UK’s latest renewables tender was a flop for the industry—not a single offshore wind bid featured in the auction despite the fact that a record number of renewable energy capacity projects were awarded government funding.
In July, a large UK project was canceled due to surging costs and challenging market conditions pressuring new developments. Vattenfall will not proceed with the development of the 1.4-GW Norfolk Boreas offshore wind project as the industry has seen cost increases by up to 40%, the company said.
In the U.S., the Inflation Reduction Act is spurring clean energy project development, but the wind industry is looking to the Biden Administration to ease the requirements for subsidy eligibility for offshore wind, alleging that the current rules under the IRA make many investments uneconomical.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.