Election Day: From the "Magical Thinking" Department
Last week, Danish wind developer Orsted said it was cancelling two major projects, the Ocean Wind 1 and 2, off the coast of New Jersey after its demands for higher subsidies had been rejected. In its earnings release, Orsted said it was recognizing impairment losses of DKK 28.4 billion, which equates to roughly $4 billion USD, blaming “adverse impacts relating to supply chain delays, increased interest rates, and the lack of an OREC adjustment on Sunrise Wind” for the need to take the write-down. BP and Equinor, two major oil companies also engaged in offshore wind development along the U.S. Northeastern coast, announced impairments of their own of $540 million and $300 million, respectively.
For those unfamiliar with industry jargon, the term “OREC adjustment” refers to Offshore Wind Renewable Energy Certificates, a classic green cost-shifting scheme in which local, state or the federal government pays wind developers an agreed-upon fee for each megawatt of power they build and deliver in locations favored by those governments. Those fees end up being worked into the utility rates paid by electricity consumers as part of an array of hidden charges on their monthly bills.
With several additional projects under development off the U.S. Atlantic coast, Orsted’s cancellations bring the future of the Biden Administration’s ambitious goals for offshore wind development into question. This is especially true since the Orsted announcement came in the wake of a lease sale in the Gulf of Mexico for wind development that attracted just a single bidder for a tract off the coast of Louisiana, and no bidders at all for tracts off the Texas coast. [emphasis mine].
Comments
Post a Comment