Tuesday, November 7, 2023
Photo: Regan Fraser, Unsplash
BP's head of renewable energy said last week that the U.S. offshore wind industry is “fundamentally broken.” The offshore wind industry should be an economic engine for Rhode Island's future economy.
Earlier this year, Maryland, Virginia, Massachusetts, Rhode Island, Connecticut, New York and New Jersey had more than 17 gigawatts of offshore wind projects under contract. Reports say about two-thirds of its production has now been canceled.
In Rhode Island, the smaller of two major offshore wind projects moved forward last week. At least for now, the Revolution Wind project is still in development. In July, Pennsylvania-owned Rhode Island Energy (RIE) rejected bids from Ørsted and Eversource to build a massive 884 MW offshore wind project off its coast.
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REI is owned by Pennsylvania Power and Light (PPL). That failed project, called Revolution Wind 2, is now defunct.
And currently there is still a long way to go to realize additional projects.
The big question is the viability of the industry as a whole. Just two years ago, offshore wind projects were seen as an environmental, energy and economic engine, both a solution to climate change and an economic engine.
U.S. Energy Secretary Jennifer Granholm visits proposed wind farm in Rhode Island in 2021 Photo: GoLocal
“It’s fundamentally broken.”
But what does a few years mean? Now BP's head of renewable energy, Anja Isabel Dotzenrath, has declared that the US offshore wind industry is “fundamentally broken.”
BP and its partner Equinor have abandoned a major project off the coast of New York and booked $840 million in project costs.
As GoLocal reported last Wednesday, Ørsted, the world's largest offshore wind energy developer, has canceled two major projects off the coast of New Jersey.
Subsequently, the company announced that it would record a write-down of up to $5.6 billion due to the suspension of development of the project.
Weeks of turmoil and uncertainty have led to disparaging comments from industry leaders.
Dotzenrath, head of gas and low carbon at BP, said problems in the US include permitting, time lags between signing power purchase agreements and construction projects, and a lack of an inflation adjustment mechanism. .
“At the end of the day, offshore wind in the United States is fundamentally broken,” Dotzenrath said at the FT Energy Transition Conference in London. “We need a fundamental reset in terms of permitting speed, permitting security, etc.”
He added that BP and Equinor are considering a new 10-point proposal from U.S. regulators that would allow the companies to rebid the project in an “accelerated” process.
This elucidation has major implications. This is a blow to Rhode Island's efforts to transform its economy and build new industries. In Washington, offshore wind energy has been a key element of President Joe Biden's response to climate change.
Rhode Island spends millions of dollars to support industry
In April, during a Quonset visit, Gov. Dan McKee announced that the General Assembly would allocate $60 million in American Rescue Plan Act (ARPA) funds to the port in 2022 to support the development of the state's only public port, which will open in Davisville. He emphasized that it continued to evolve as a port. An important hub for the North Atlantic offshore wind industry.
Tens of millions of dollars in additional federal grants are being poured into both Quonset and Probport in hopes of establishing Rhode Island as a player in the offshore wind industry.
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