July 23, 2023
By KAREN VELIE
Amid soaring costs, wind energy companies have canceled two offshore projects in the United States and a third in Britain even as the demand for renewable energy solar lights.
Iberdrola canceled a contract to sell power from a planned wind farm off the coast of Massachusetts while Orsted lost a bid to provide offshore wind power to Rhode Island because of rising costs. In Britain, Vattenfall backed out of plans for an offshore wind farm because of inflation.
Rising equipment and labor costs along with high interest rates have led to a crisis in an industry that already touts higher energy costs than traditional power plants.
“Costs of capital (the ‘fuel’ of renewable energy) and price inflation on turbines, cables etc have gone up sharply,” said Mads Nipper, chief executive officer at Orsted, in a post on LinkedIn. “This means that the price of renewable energy regrettably must come up temporarily after years of steep decline.”
California plans to rely on offshore wind energy to achieve its renewable energy goals. The offshore wind farms are projected to generate 2,000 to 5,000 megawatts of energy by 2030 and 25,000 megawatts by 2045.
Last year, the federal government auctioned off three offshore wind energy sites located between 20 and 30 miles off the coast near Morro Bay. While these projects could move ahead, it is likely the cost of energy the wind farms generate will soar in price.