January 3, 2023 — Offshore wind developers are facing financial challenges that threaten to derail several East Coast projects critical to reaching the Biden administration’s near-term clean-energy targets.
Supply-chain snarls, rising interest rates and inflationary pressures are making projects far more expensive to build. Now, some developers are looking to renegotiate financing agreements to keep their projects under way.
The Biden administration has set a target for the U.S. to develop 30 gigawatts of offshore wind power by 2030—enough to supply electricity to roughly 10 million homes. Analysts say that target will be difficult, if not impossible, to achieve if cost and supply issues persist.
“We’re seeing unexpected and unprecedented macroeconomic challenges,” said David Hardy, chief executive of the Americas for Danish power company Ørsted A/S, which is developing about five gigawatts of offshore wind projects off the coast between Rhode Island and Maryland.
Avangrid, a subsidiary of Spanish power company Iberdrola SA, is developing a 1.2-gigawatt project called Commonwealth Wind off the coast of Massachusetts. The company in December asked the Massachusetts Department of Public Utilities to terminate its review of contracts the company negotiated with utilities serving the state. The company said it now intends to scrap the contracts and rebid the project next year to account for higher costs.