With the termination of two major offshore wind projects in New Jersey, President Joe Biden’s aim of reaching a carbon-free electric grid by 2035 and powering 10 million households with ocean-based turbines by 2030 faces substantial obstacles. Here’s the full story.

The Cancellation of the Projects

Ørsted’s decision to abandon the Ocean Wind I and II projects off the coast of southern New Jersey dealt a blow to the Biden administration’s plans. The combined capacity of these projects was expected to exceed 2.2 gigawatts, contributing significantly to the 2030 offshore wind power target. This followed the cancellation of power agreements for three projects by New England developers, further compounding the challenges.

Despite these setbacks, the White House maintained that offshore wind was still progressing, pointing to recent investments by New York State and the Interior Department’s approval of the largest proposed offshore wind farm in Virginia.

Plus, new offshore wind lease sites in the Gulf of Mexico were announced. The administration shared that the growth of the U.S. offshore wind industry, generated union jobs and contributed to clean energy resources.

The Reasons for the Cancellations

Developers of offshore wind farms attributed the setbacks to a “perfect storm” of challenges, including supply chain interruptions, high inflation, increased loan rates, and rising costs of finance and building materials.

Ørsted, for instance, deducted $4 billion due to the cancellations in New Jersey. David Hardy, CEO Americas at Ørsted, said that it was required to reduce the levelized cost of offshore wind in the U.S. to avoid a trade-off between affordability and clean energy.

Experts’ Views

As the offshore wind industry in the U.S. faced economic headwinds, experts suggested that reaching the Biden administration’s goal of 30 gigawatts by 2030 might be ambitious.

ClearView Energy Partners estimated that achieving 20 to 22 gigawatts by 2030 was more realistic, considering ongoing challenges. Despite the hurdles, the industry was still making progress, with several projects in development.

“We definitely remain optimistic. Offshore wind is a lot bigger than Ørsted,” said Catherine Klinger, Murphy’s climate action and green economy executive director.

Balancing Economic Realities and Clean Energy Goals

The cancellation of projects has raised questions about the economic viability of offshore wind and the trade-offs involved in achieving clean energy goals.

Developers accepted the need to navigate a learning curve, mirroring the evolution of the industry in Europe.

Catherine Bowes, a senior director at Turn Forward, shared that while Ørsted’s cancellations in New Jersey represent a setback, the approval of the Coastal Virginia Offshore Wind project, powering 900,000 households with a 2.6-gigawatt wind farm off the coast of Virginia Beach, shows progress.

So what do you think? How could the U.S. strike a balance between ambitious renewable energy targets and the economic challenges faced by offshore wind projects?