International observation | The dilemma of U.S. offshore wind power development reflects the "headwind" of energy transformation

2024-05-23 15:39 Xinhua Editor in charge: Chen Xi

Xinhua News Agency, Houston, May 22

Nie upstream

"2023 will be a tough year for American offshore wind power." Troy Patton, chief operating officer of Denmark Wasch Energy Company in North America, said at the recently concluded International Offshore Oil and Gas Technology Conference and Equipment Exhibition in Houston, the United States, that the company will cancel two wind power projects in the sea area near New Jersey, the United States, with a total installed capacity of 2.2 GW. In addition, according to American media, another three offshore wind power projects with an installed capacity of 3.2 GW in the United States have also been cancelled.

The intensive cancellation of offshore wind power projects has caused many industry insiders to worry. It is generally believed that due to the long development cycle of offshore wind power, the United States may be difficult to meet the government's target of 2021, namely, to complete the 30 GW offshore wind power installation target by 2030.

Objectively, the coastal area along the Atlantic Ocean in the northeastern United States is the "ideal area" for the development of offshore wind power. It has a shallow continental shelf that is convenient for installing wind turbines, a developed port and manufacturing industry, and a geographical location close to the coastal population and economic center.

In addition, the U.S. government has introduced many favorable policies in recent years that are conducive to the development of the renewable energy industry, providing tax relief and other incentives for offshore wind energy development. Many European wind power giants once entered the US market and launched several offshore wind power projects.

So why are American offshore wind power projects in trouble now? What impact will this have on the US energy transition?

Industry experts said that the current financial environment in the United States is one of the important obstacles facing offshore wind power development. Long term high inflation combined with high interest rates has led to the soaring financing costs of many offshore wind power projects, making it difficult to maintain economic sustainability. Christopher Nizleiki, an American energy expert, said: "The sharp rise in the prices of bulk commodities, including steel and copper, as well as construction and operating costs, makes the contracts signed many years ago no longer financially viable."

Nizleiki pointed out that labor shortage, upgrading of onshore power grids, false information released by interest groups and other factors have hindered the development of offshore wind power in the United States.

At the same time, the United States has developed slowly in supporting infrastructure construction and manufacturing industries necessary for offshore wind energy development. At present, relevant supporting facilities of the U.S. offshore oil and gas industry are mainly concentrated in the Gulf of Mexico in the south, while there are insufficient supporting facilities in the northeast. In addition, the premise of US legislation requiring financial subsidies is to use "Made in America", which creates artificial obstacles to offshore wind energy development.

From the perspective of market trend, because the United States is rich in natural gas resources and the price is far lower than that of Europe and East Asia, the profit space of offshore wind power development is objectively compressed, and the current favorable policies are not enough to bridge this gap.

This year is the election year of the United States, and the political game between the two parties has also brought uncertainty to offshore wind energy development. The Republican Party has said that once it wins the election, it will stop the offshore wind power development supported by the current government as soon as possible, because offshore wind turbines "kill birds and whales".

Analysts said that in the long run, the energy transition is the general trend to deal with climate change, and offshore wind power development will help the United States and other countries and regions in the world where conditions permit to promote the energy transition process. However, at present, it seems that the development of offshore wind power in the United States is encountering difficulties, and the "tailwind" that should have promoted the energy transformation has turned into "headwind".

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