Offshore Wind Lease Buybacks In The US Approach Four Billion Dollars
A German utility's American offshore subsidiary has agreed to relinquish wind leases off New York, California and Louisiana in exchange for 1.22 billion dollars, bringing the total the United States administration has spent buying back offshore wind leases to close to four billion. The leases surrendered could have supported around seven gigawatts of generating capacity, and the company now holds no remaining American offshore wind leases.
The company said its leases represented years of planning, investment and partnership with federal agencies, but that it had concluded there was no path forward to permit the projects for the foreseeable future. Alongside the settlement it announced 900 million dollars of investment in a Louisiana liquefied natural gas project and 300 million on gas turbines, and it is developing fifteen gas projects across the country. That pairing is not incidental: earlier settlements in the programme have been structured around a requirement that the recipient invest an equivalent sum in fossil fuel projects instead.
The buyback strategy was adopted after federal courts blocked attempts to halt offshore wind development by executive action. Rather than litigate, the administration has been paying developers to withdraw, beginning in March with a settlement of nearly a billion dollars with a French major, followed in April by agreements totalling close to 900 million with two developers and in June by 765 million to an Illinois-based company for four early-stage leases. The president has said his goal is to prevent any turbines being built.
The reaction has split along predictable lines. The interior secretary welcomed the agreement and the accompanying voluntary investment. A senator from Rhode Island described the buybacks as effectively bribing companies to step away from clean energy and called the arrangement a scam. States losing planned offshore wind generation have begun litigation, with California indicating it intends to sue. Separately, a federal judge in Oregon ruled in favour of renewable energy groups that had sued over failures to complete national security reviews for onshore wind farms, ordering the defence department to resume the process.
For the offshore wind supply chain the consequence is a market that has effectively closed. Seven gigawatts of cancelled capacity is a substantial volume of foundations, cables, turbines and installation vessel days that will not now be required, and it lands on a European supply chain that expanded partly in anticipation of American demand. Installation contractors and cable manufacturers have been booking capacity into the 2030s on the assumption that the Atlantic seaboard would be a significant market. Four billion dollars of settlements says otherwise, and the assets ordered against that assumption have to find work elsewhere.
