What Ails Offshore Wind: Supply Chains, Ships and Interest Rates

A few years ago, interest in offshore wind energy was so strong that developers proposed spending tens of billions of dollars to plunk hundreds of turbines the size of skyscrapers in the Atlantic Ocean from Maine to Virginia.

But several of those projects have recently hit the skids after executives miscalculated the impact that the pandemic and rising interest rates would have on supply chains. The industry has found it much more difficult to manufacture, transport and erect wind turbines than it had expected. Just two dozen or so turbines have been installed in U.S. waters, compared with more than 6,000 in Europe, which has been building offshore wind farms for decades.

As a result, the cost of offshore wind energy will be higher than anticipated and its climate and economic benefits will, in some cases, arrive years later than expected.

Some wind farms may be delayed. Others may never be built.

To date, Eastern states have awarded contracts to build roughly two dozen offshore wind farms with 21 gigawatts of electric capacity, or enough to meet the needs of more than six million homes. But developers have canceled or asked to renegotiate rates for nearly half that capacity. Analysts are downgrading expectations: About 15 gigawatts of offshore wind will be installed by 2030, according to BloombergNEF, a research arm of Michael Bloomberg’s financial data and information company. That’s about one-third lower than what it had expected as recently as June. Europe has already installed about 32 gigawatts of offshore wind capacity.