Why the US offshore wind industry is in the doldrums

 Energy giants BP and Norway's Equinor have booked hundreds of millions of dollars worth of impairments on their U.S. offshore wind power portfolios in recent days, the latest examples of a renewable energy industry in turmoil.

Danish energy company Orsted, the world's largest offshore wind farm developer and a big player in the U.S., said in late August it may see 

$2.3 billion

in U.S. impairments due to supply delays, high interest rates and a lack of new tax credits. It will report third quarter earnings on Wednesday.

The companies are among several energy firms trying to build new offshore wind farms in the U.S., but feeling pain, raising questions about the future of fleet of projects that U.S. President Joe Biden hopes can help fight climate change.

Biden’s administration wants the U.S. to deploy 30,000 megawatts (MW) of offshore wind by 2030 from a mere 41 MW now, a key part of his plan to decarbonize the power sector and revitalize domestic manufacturing, and has passed lucrative subsidies aimed at helping companies do that.

But even with regulatory rules and subsidies in place, developers are facing a whole new set of headwinds.

Here is what they are:

INFLATION

The U.S. offshore wind industry has developed much more slowly than in Europe because it took years for the states and federal government to provide subsidies and draw up rules and regulations, slowing leasing and permitting.

However, as government policies started to line up in the industry's favor in recent years, offshore wind developers unveiled a host of new project proposals, mostly off the U.S. East Coast.

Two small projects came into operation - Orsted's five-turbine Block Island wind farm off Rhode Island and the first two test turbines of U.S. energy firm Dominion Energy's Coastal Virginia Offshore Wind off Virginia.

Then came a hitch.

The COVID-19 pandemic gummed up supply chains and increased the cost of equipment and labor, making new projects far more expensive than initially projected.

https://finance.yahoo.com/news/explainer-why-us-offshore-wind-162505120.html