A Clean-Energy Bet Goes Bad for Power Companies
U.S. power companies raced to get in on the offshore wind boom a few years ago. Now some are rushing to get out.
Already, utilities have unloaded pieces of a planned New Jersey wind farm and a yet-to-be-built seabed off Massachusetts. Now, “for sale" signs sit on stakes in four developments aimed at electrifying hundreds of thousands of homes in New York, Connecticut, Rhode Island and Virginia. The pullback is adding to the turmoil in a new industry at the center of the U.S.’s renewable-energy ambitions.
Developers behind projects totaling 8.5 gigawatts of electricity—more than a quarter of President Biden’s 2030 goal—canceled or are expected to cancel state-approved power contracts to propose deals with new terms, according to Intelatus Global Partners. Two projects have been nixed outright. The retreat by utilities underscores the challenge of building turbines the size of skyscrapers in the ocean, with supply-chain snarls and higher interest rates blowing up project budgets.
“Utilities over time have learned they don’t want to be first movers," said Shahriar Pourreza, an analyst at Guggenheim Partners, adding that investors in the sector seek slow and steady returns. “Let someone else be the first, second and third mover." Several U.S. power companies set out on offshore developments years ago, competing alongside larger energy firms including British oil behemoth BP and Norway’s Equinor.
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