Wind Power, Key to Democrats’ Climate-Change Goals, Faces a Crisis – US 247 News


Before the end of this year, thousands of families in New York could be using electricity produced by a wind farm off the eastern tip of Long Island that will be the state’s first.

But will it also be the last?

Instead of gathering momentum as the long-promised benefits of offshore wind farms are about to be realized, the industry is now faced with an existential crisis.

An assortment of recent obstacles to projects in New York, New Jersey and Connecticut are almost certain to delay — and possibly derail — Northeastern states’ grand ambitions to harness the winds blowing over the Atlantic Ocean.

Four projects that were supposed to provide electricity to New York City and its suburbs are in limbo after being denied big increases in subsidies. And on Tuesday, the world’s biggest developer of offshore wind farms shocked New Jersey officials by backing out of two projects off the state’s southern coast. “Macroeconomic factors” including inflation and rising interest rates had made the projects too expensive, the company said.

“Certainly, these project cancellations are arrows in the quiver of offshore wind opponents,” said Timothy Fox, vice president at ClearView Energy Partners in Washington. Still, he added, he did not expect any states to abandon their offshore wind plans because all of the ones that have made big commitments, except Virginia, are controlled by Democrats.

The nine gigawatts of offshore wind power that New York is chasing was supposed to be a major piece of President Biden’s goal of creating 30 gigawatts of offshore wind nationally by 2030. (The Biden administration says 30 gigawatts could power more than 10 million homes.) That goal was considered unattainable even before the developer, Orsted, backed out of the two New Jersey projects, which the company said would have produced 2.25 gigawatts.

“Frankly, even by this past summer we were recognizing the inevitability of missing the 30-by-30 target,” said Kris Ohleth, director of the Special Initiative on Offshore Wind, a nonprofit organization that advises companies and policymakers.

The about-face in New Jersey has reignited a political battle over the headlong rush to induce companies to build wind farms in the ocean. New Jersey’s governor, Philip D. Murphy, a Democrat with national ambitions, said Orsted’s decision to abandon his commitments called into question “the company’s credibility and competence.” He insisted that the “future of offshore wind” along the state’s 130-mile coastline remained “strong.”

But it was clear that the decision by Orsted was a major blow to Mr. Murphy’s environmental legacy.

He and his wife, Tammy Murphy, who is considering a run for the US Senate and sits on the board of former Vice President Al Gore’s Climate Reality Projecthave gambled heavily on using offshore wind to meet the Murphy administration’s ambitious goals.

“The public is turning very sour on this because they’re realizing just how expensive offshore wind is,” said Jonathan A. Lesser, an economist affiliated with the conservative Manhattan Institute who is a critical of offshore-wind development. “On the other hand, you’ve got politicians in those states who seem to be totally committed to offshore wind regardless of the costs.”

Republicans in New Jersey were critical of the Murphy administration this past summer for allowing Orsted to keep federal tax credits that would have gone to the state’s utility customers. They called it a “corporate bailout.”

“Orsted’s decision today confirms that Republicans were right when we said this was too much, too fast, and too costly,” said Senator Anthony M. Bucco, the Republican minority leader in Trenton, in a statement. “Their financial challenges were glaringly obvious, yet Democrats ignored the warning signs.”

The opponents included Jersey Shore residents concerned about tourism revenue and their ocean views. They joined forces with fishermen worried about the effect on their livelihoods and groups alarmed by a recent spate of whale deaths. The federal government has found no evidence linking the stranded whales to the construction of the wind farms.

Candidates in tight races on Tuesday, when every seat in the state Legislature will be on the ballot, have tried to capitalize on, or blunt, the tension.

Senator Vin Gopal, a Democrat who represents shore communities and is up for re-election, noted that he had opposed the tax credits for Orsted and on Tuesday called for an investigation by the state’s attorney general.

Like Mr. Murphy, Kathy Hochul, New York’s Democratic governor, has laid out an ambitious plan for shifting power generation from fossil fuels to renewable sources.

Offshore wind is central to Ms. Hochul’s goal of having 70 percent of New York’s electricity generated from renewable sources — including solar, wind and hydro power — by 2030. She has said ocean-based wind turbines would provide as much as 9,000 megawatts of power to the state, enough to power 6 million homes.

Orsted, which is building South Fork Wind, the set of turbines going up 30 miles east of Montauk Point on Long Island, was expected to play a central role in the transition.

The developer said in its New Jersey announcement this week that it would proceed with the construction of South Fork Wind, an array of 12 towering turbines. The cable that will carry electricity from that project is already stretched across 60 miles of ocean floor and connected to a substation in East Hampton.

But Orsted, a Danish company, had also planned to build Sunrise Wind, a much larger facility, with the New England utility company Eversource.

South Fork Wind, which is expected to power about 70,000 homes, is modest compared to Sunrise Wind and three other wind farms planned for the waters south of Long Island that have contracted to provide electricity to New York: Beacon Wind and Empire Wind 1 and 2 But those are years behind South Fork and in recent weeks their future has become more uncertain.

Complaining of rising costs and disruptions in the supply chain for parts and equipment, Orsted and the developers of those projects, Equinor and BP, asked New York officials to pay considerably more than agreed to — $12 billion more — for the power they would generate. Without the increases, the companies said, they might not be able to build the wind farms.

The requests highlighted the balancing act regulators face between protecting utility customers and trying to wean the state off generators fueled by natural gas. But rather than strike a compromise, New York’s Public Service Commission denied the requests, holding the companies to the terms of their contracts.

Then, worried that the developers might abandon the deals and wreck the state’s hopes for bringing wind power to the metropolitan area, Ms. Hochul announced last month that New York was considering quickly taking new bids for supplying that wind power. Ms. Hochul also announced the awarding of three additional contracts for offshore-wind power and the state’s intention to invest $300 million in new upstate factories that would make parts for offshore turbines.

“We’re truly launching a brand-new industry here,” the governor said at a news conference in Long Island City, Queens. Alluding to the troubles some of the projects had encountered, she added: “We’ll be judged by how we act at this moment. Do we have the courage, the will, to put the resources behind us and break through all barriers to get this done right?”

Ms. Hochul and other state officials have suggested that New York could still meet its targets for renewable energy. But industry analysts say that is unlikely.

Mr. Fox, the ClearView Energy Partners analyst, estimated that New York’s refusal to increase the subsidies would cause a delay of one to three years for those projects. They were scheduled to be online by 2025, at the earliest.

Mr. Fox said the developers would probably break their contracts and bid again at higher prices. Connecticut’s wind-power plans were hindered last month when a wind-farm developer, Avangrid, decided to cancel a contract and pay a $16 million penalty.

Orsted would be willing, or welcome, to bid again. Whether after halting two big projects is an open question.

“It is not clear-cut exactly how this will play out,” said Soren Lassen, the head of offshore wind research at Wood Mackenzie, an energy consulting firm.

Tracey Tully and Grace Ashford contributed reporting.