The Arc Of The Renewables Universe Is Long, But It Bends Toward Bankruptcy.
Ørsted, a major player in the offshore wind development sector, has decided to pull the plug on its Ocean Wind 1 and Ocean Wind 2 projects off the coast of New Jersey. Citing “escalated financial difficulties and supply chain issues”.
Ørsted’s decision brings to light the tumultuous waters that renewable energy projects are now starting to regularly encounter.
“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” said David Hardy, group executive vice president and CEO Americas at Ørsted. This statement reflects the vulnerability of such grandiose renewable projects to economic fluctuations and logistical nightmares.
The cancellation of these projects is not just a setback for Ørsted but also dents the ambitious renewable energy goals of the United States. It came shortly after the Biden administration announced the final approval of the Coastal Virginia Offshore Wind project, which was touted as a significant milestone in the U.S. renewable energy landscape.
Local officials and communities in New Jersey, who had been at loggerheads with Ørsted and other state and federal agencies, welcomed this decision. They had been voicing their concerns and opposition against the potential impacts of the Ocean Wind 1 project.
“This is a great day for the people and businesses of Cape May County,” said Len Desiderio, director of the Cape May County Board of Commissioners, reflecting the relief and vindication felt by the local communities.
Despite this setback, Ørsted continues to express its commitment to the U.S. renewable energy market.
“We remain committed to the U.S. renewable energy market, building clean power that will create jobs across technologies and states from the Northeast to Texas,”
Hardy said. However, the abandonment of the New Jersey projects raises questions about the feasibility and practicality of such commitments in the face of economic and logistical uncertainties.
Ørsted’s decision to abandon its wind projects off New Jersey is a stark reminder of the unpredictable and challenging nature of renewable energy projects. It underscores the need for a more realistic and pragmatic approach towards planning and executing all energy projects, putting engineering and economics ahead of political dictates, taking into consideration the various economic, logistical, and community-related factors that can impact their success.
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