by Delays in the offshore wind industry continue to grow as sticky inflation and supply chains challenge developers to delay or cancel major projects. In particular, progress toward the Biden administration’s goal of removing large amounts of floating wind farms off the US northeast coast has virtually stalled.
Shell, which has invested in a series of offshore wind projects in recent years, including in the northeastern United States, announced last week that it would lay off a large part of its offshore wind business team as it the oil giant advances its refocusing program on its core oil and gas business.
“We are focusing on select markets and segments to provide the greatest value to our investors and customers,” a Shell spokesperson told Bloomberg. “Shell is looking at how it can continue to compete for offshore wind projects in priority markets while maintaining our focus on performance, control and simplification.”
Wind turbine maker Siemens Gamesa announced even more layoffs, saying it would cut 15 percent of its global workforce to adjust to a slowing market. The announcement comes after the company reported a loss of €4.6 billion for 2023, a losing trend in the first half of 2024.
“Our current situation requires adjustments that go beyond organizational changes. We need to adapt to lower business volumes, reduced activity in non-core markets, and a streamlined portfolio,” outgoing CEO Jochen Eickholt said in a letter to staff.
On 29 May the results of a survey compiled by London-based energy consultancy Westwood indicated that the global floating offshore wind industry is likely to deliver less than 3 gigawatts (GW) of new floating generation capacity by 2030, and a total of about 10 GW by 2040. Westwood cites the lack of standardization of floating technology (55 percent), manufacturing capacity and capacity (51 percent) and port infrastructure (50 percent) as the main barriers.
Given the gloomy industry outlook, Westwood notes that “there are calls for governments to provide more specific policy and regulatory support for technology development as well as to reduce costs and invest in port infrastructure to accelerate adoption.”
This is entirely predictable, since the voracious rent-seeking wind business often requires more government to be involved in response to any challenge that arises. Unfortunately, the call is all too often answered by policy makers with big political stakes in being able to show off a series of giant windmills floating on top of the various oceans and seas, which produces some electricity intermittently – generally 25-30 percent of a plant’s nominal capacity over time. .
This latest bit of bad news for offshore wind could be very serious for US President Joe Biden’s re-election campaign, given that he has invested so much of his personal political capital in building large offshore wind farms. floating coast in the North East Atlantic. The Department of Energy’s 2023 fact sheet sets out the administration’s goal of installing 30 GW of offshore wind capacity by 2030 for the US alone, exceeding Westwood’s estimated capacity for world new resource by that year by a factor of 10 times more.
So far, regulators under Biden have approved permits for 6 major offshore projects, several of which have already been delayed or canceled by developers due to tougher economic factors. In late 2023, major Danish wind developer Orsted canceled two projects off the Atlantic coast, while Shell divested its 50 percent stake in another in March this year. Equinor and BP announced in January that they were canceling plans for their Empire Wind 2 project, citing similar economic concerns.
One US offshore project, Vineyard Wind 1, was able to begin delivering 25-30 percent of 68 megawatts (MW) to Massachusetts residents in January with the activation of 5 offshore turbines. The South Fork Wind Project was also able to start the first deliveries to New York in March, with 12 turbines able to generate some 130 MW.
But this is less than one percent of Biden’s goal of 30 GW, with only five and a half years left until 2030. Given the wind industry’s insatiable appetite for ever-growing subsidies and rising utility fees in always, how much is an open question. more billions of dollars the federal government will be allowed to print to keep projects alive before the voters start rebelling against the cost.
It is an uprising that could begin as early as next November.
David Blackmon had a 40-year career in the US energy industry, the last 23 of which were spent in the field of public policy, managing regulatory and legislative issues for various companies. He continues to write and podcast on energy matters
