Explainer-Why the US offshore wind industry is in the doldrums

investing.com:

By Scott DiSavino and Nerijus Adomaitis

(Reuters) — The value of Danish energy company Orsted (CSE:ORSTED), the world's largest offshore wind farm developer and a big player in the U.S., has plunged about 31% since it declared $2.3 billion in U.S. impairments in late August due to supply delays, high interest rates and a lack of new tax credits.

The company is just one of several energy firms trying to build new offshore wind farms in the U.S., but the pain it is feeling is rippling across the entire industry, 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 governing the industry, 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 (NYSE:D)'s Coastal Virginia Offshore Wind off Virginia. Then came a hitch.