Wind energy, key to Democrats’ climate goals, is facing a crisis

Before the end of this year, thousands of New York homes could use electricity produced by a wind farm off the eastern tip of Long Island, the first in the state.

But will it also be the last?

Instead of gaining momentum as the long-promised benefits of offshore wind farms are about to be realized, the sector is now mired in an existential crisis.

A series of recent obstacles to projects in New York, New Jersey and Connecticut will almost certainly delay — and possibly derail — the northeastern states’ grand ambitions to harness winds blowing across the Atlantic Ocean.

Four projects meant to provide electricity to New York City and its suburbs are in limbo after being denied major subsidy increases. And on Tuesday, the world’s largest developer of offshore wind farms shocked New Jersey officials by pulling out of two projects off the state’s southern coast. “Macroeconomic factors” including inflation and rising interest rates had made the projects too expensive, the company said.

“Certainly, these project cancellations are arrows in the quiver of offshore wind opponents,” said Timothy Fox, vice president at ClearView Energy Partners in Washington. Still, he added, he didn’t expect states to abandon their offshore wind energy plans because all of the states that have made major commitments, except Virginia, are controlled by Democrats.

The nine gigawatts of offshore wind energy that New York is pursuing would be a key part of President Biden’s goal of creating 30 gigawatts of offshore wind energy nationally by 2030. (The Biden administration says 30 gigawatts could power more than 10 million homes.) That goal was considered unattainable even before the developer, Orsted, withdrew from the two New Jersey projects, which the company said were 2 would have produced .25 gigawatts.

“Frankly, we recognized last summer that it was inevitable that we would miss the 30 by 30 target,” said Kris Ohleth, director of the Special Initiative on Offshore Wind, a nonprofit that advises companies and policymakers.

The reversal in New Jersey has fueled a political fight over the heady rush to push companies to build wind farms in the ocean. New Jersey Governor Philip D. Murphy, a Democrat with national ambitions, said Orsted’s decision to abandon its commitments “called into question the company’s credibility and competence.” He emphasized that the “future of offshore wind energy” along the state’s 130 miles of coastline remains “strong.”

But it was clear that Orsted’s decision was a major blow to Mr Murphy’s environmental legacy.

He and his wife Tammy Murphy, who is considering a run for the U.S. Senate and serves on former Vice President Al Gore’s administration Climate Reality Projecthave bet heavily on using offshore wind energy to meet the Murphy administration’s ambitious goals.

“The public is getting very angry about this because they realize how expensive offshore wind energy is,” said Jonathan A. Lesser, an economist at the conservative Manhattan Institute. critic of offshore wind energy development. “On the other hand, you have politicians in those states who seem completely committed to offshore wind energy, regardless of the cost.”

Republicans in New Jersey were critical of the Murphy administration last summer for allowing Orsted to remain federal tax credits that would have gone to the state’s utility customers. They called it a “business rescue operation.”

“Orsted’s decision today confirms that Republicans were right when we said this was too much, too fast and too expensive,” Sen. Anthony M. Bucco, the Republican minority leader in Trenton, said in a statement. “Their financial problems were obvious, yet Democrats ignored the warning signs.”

Opponents included Jersey Shore residents concerned about tourism revenue and their ocean views. They joined forces with fishermen were concerned about the impact on their livelihoods and groups alarmed by a recent wave of whale deaths. The federal government has found no evidence linking the beached whales to the construction of the wind farms.

Candidates in tight races on Tuesday, when every seat in the state Legislature will be on the ballot, have sought to capitalize or play down the tension.

Sen. Vin Gopal, a Democrat who represents coastal communities and is running for re-election, noted that he had opposed the tax breaks for Orsted and called Tuesday for an investigation by the state’s attorney general.

Like Mr. Murphy, Kathy Hochul, the Democratic governor of New York, has laid out an ambitious plan to shift energy generation from fossil fuels to renewable sources.

Offshore wind energy is central to Ms. Hochul’s goal of having 70 percent of New York’s electricity generated from renewable sources — including solar, wind and hydropower — by 2030. She has said offshore wind turbines could provide as much as 9,000 megawatts of power. to the state, enough to power 6 million households.

Orsted, which is building South Fork Wind, the series of turbines that rise 30 miles east of Montauk Point on Long Island, is expected to play a central role in the transition.

The developer said in its New Jersey announcement this week that it would proceed with construction of South Fork Wind, a series of 12 towering turbines. The cable that will carry that project’s electricity has already been stretched across 60 miles of the ocean floor and connected to a substation in East Hampton.

But Orsted, a Danish company, also planned to build Sunrise Wind, a much larger facility, with the New England utility Eversource.

South Fork Wind, which is expected to power about 70,000 homes, is modest compared to Sunrise Wind and three other wind farms planned for waters south of Long Island that have contracted to provide electricity to New York: Beacon Wind and Empire Wind 1 and 2 But they are years behind the South Fork and in recent weeks their future has become more uncertain.

Orsted and the developers of those projects, Equinor and BP, complained about rising costs and disruptions in the supply chain of parts and equipment and asked New York officials to pay significantly more than agreed — $12 billion more — for the power they would generate. Without the increases, they might not be able to build the wind farms, the companies say.

The requests highlighted the balancing act regulators face between protecting utility customers and trying to wean the state away from generators that run on natural gas. But rather than compromise, New York’s Public Service Commission denied the requests and held the companies to the terms of their contracts.

Then, last month, Ms. Hochul announced that New York was considering quickly issuing new bids to supply that wind power, worried that developers would abandon the deals and dash the state’s hopes of bringing wind power to the metro area doing. Ms Hochul also announced the award of three additional offshore wind energy contracts and the state’s intention to invest $300 million in new factories in the state that would make components for offshore turbines.

“We’re really launching a whole new industry here,” the governor said at a news conference in Long Island City, Queens. Referring to the problems some projects had faced, she added: “We will be judged on how we behave at the moment. Do we have the courage and will to leave behind the means and break all barriers to get this right?”

Ms. Hochul and other state officials have suggested that New York could still meet its renewable energy goals. But industry analysts say this is unlikely.

Mr. Fox, the ClearView Energy Partners analyst, estimated that New York’s refusal to increase subsidies would cause a delay of one to three years for these projects. The plan was that they would not be online until 2025 at the earliest.

Mr Fox said the developers were likely to break their contracts and bid again at higher prices. Connecticut’s wind energy plans were hampered last month when a wind farm developer, Avangrid, decided to terminate a contract and pay a $16 million fine.

Whether Orsted would be willing or welcome to bid again after abandoning two major projects is an open question.

“It’s not clear exactly how this will play out,” said Soren Lassen, head of offshore wind research at Wood Mackenzie, an energy consultancy.

Tracey Tully And Grace Ashford reporting contributed.