Financial Loses May Reach $5.6 Billion! Article by John Toth
Orsted stunned the offshore wind industry by announcing on October 31st that it was stopping work on its two New Jersey wind projects. Ocean Wind 1 was supposed to be New Jersey’s first offshore wind project, opening the door for more to follow. The 98-wind turbine would have been located southeast of Ocean City and would have powered about 500,000 homes once complete. A second Orsted project, Ocean Wind 2, would also have powered another half-million homes and was under development in waters south and west of the first project.
Years of work had already been completed, designs approved and permits secured from various agencies. There was outreach to various communities to explain the projects and the numerous job offers that would result during construction of them, also explaining the sites where they would be installed.
Financial loses also include payments to equipment suppliers for goods already ordered or delivered and penalties for walking away from contracts. Additionally, New Jersey’s legislature and Governor Murphy approved giving Orsted a $1 billion tax break to give Orsted financial support through their difficult financial times. Now Senator Vin Gopal is calling on the our state’s Attorney General to sue Orsted for fraud and negligence and to get every penny returned to our state. On the day after Orsted walked away from their NJ Windmill projects, Governor Murphy said that Orsted was a “dishonest broker”.
While many of us have tried our best to pause or stop offshore wind development, our many questions went unanswered by Orsted and their windmill project seemed to be unstoppable. What did stop them was basically that their windmill projects would cause Orsted to lose a lot of money due to supply chain problems, inflation, high interest rates and increasing labor costs. Orsted’s windmills would have been 850 feet high. Building that high of a structure would require a huge amount of steel and high labor costs to erect them along with blades over 300 feet long. Because of these issues, Orsted’s CEO, Mads Nipper, decided to cancel their windmill projects in New Jersey since going forward with them would result in more financial losses over time.
The same issues that caused Orsted’s financial losses to stop construction have spread to other windmill companies. Equinor has written its value down by $300 million. Its partner, BP (British Petroleum), $500 million and Eversource sliced $300 million from its portfolio. All of this chaos caused a BP executive to lament that the offshore wind industry is “fundamentally broken”. Hopefully, they will also follow Orsted’s example and also cancel their offshore windmill projects.
If the offshore wind industry is going to move forward, it will require subsidies and tax breaks. Orsted’s CEO, Mads Nipper, said that “Consumers will also have to pay more in their electric bills for power generated from offshore wind, as developers demand higher prices and protection from inflation”. Do we really need to pay more for our electric bills so that these developers can make a profit? However, governmental agencies in Washington and Trenton will probably throw good money after bad since it is of no cost to them and it also hurts to publicly admit that windmills are not a good investment to fight Climate Change.
In speaking of Climate Change, it has gone on for millions of years and about several hundreds of years ago the world even had a mini Ice Age. Our world’s temperature is not run by a thermostat and nature will go where it wants to go. We are not going to change it by outlawing gas stoves and replacing them with electric ones. Mandating new homes to be heated by electric is more costly and not as efficient as natural gas. How our electric grid can handle more demand for home heating and electric vehicles is a question that needs more attention if we are to move forward with these measures to reduce Climate Change. What will change are the increased and needless costs we will be paying in our electric bills to finance all of them, including offshore windmills.
Sources: New York Times, November 2, 2023
Asbury Park Press, November 2, 2023
New York Post, November 3, 2023