Factbox-US offshore wind projects facing inflation headwinds

investing.com:

(Reuters) — The U.S. has no large-scale commercial wind farms in operation today, but President Joe Biden's administration aims to have 30 gigawatt (GW) installed by 2030 to help decarbonize the power sector and revitalize domestic manufacturing. The federal government has already approved several large-scale projects so far, with the first two — Vineyard Wind 1 and South Fork — expected to deliver first power by the end of this year, and about a few dozen projects are in different stages of development. Some 27 power offtake contracts totaling more than 17 GW had been signed by the end of May, according to a U.S. Department of Energy report published on Aug. 24. However, inflation, supply bottlenecks and higher financing costs have eroded profitability of many projects, forcing some to cancel the offtake agreements, while others are still seeking to renegotiate the terms, the report said.

Some developers told Reuters they were also pressing officials to ease requirements for subsidies under the year-old Inflation Reduction Act.

While wind power costs had fallen by about 50% since 2014, a recent industry survey showed costs rose by 11%-20% over 2022, and in some cases by 30%, the report said.

Levelized cost of energy (LCOE), which compare the total lifetime cost of building and running a plant to lifetime output, stood at between $72 and $140 per megawatt hour (MWh) in the U.S., an analysis by investment bank Lazard (NYSE:LAZ) showed in April.

That compared with $24 to $96 for utility-scale solar, $24 for onshore wind and $39 to $101 for combined cycle gas.

To compare, in 2022, wholesale electricity prices averaged about $92 in New England, $90 in New York and $83 in the PJM West Hub, which runs from western