America’s biggest failure in history, exposed: The energy that every country but us can develop by D. García

America’s biggest failure in history, exposed: The energy that every country but us can develop

by D. García

08/20/2024

in Energy

Credits: essentialbusiness.com

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America is developing a very powerful energy industry, in line with the 2030 climate goals. Sources such as hydrogen and photovoltaics are exploding, but there is still one that we have not managed to control. In fact, experts, such as those quoted in Yale Climate Connections magazine, have uncovered that the source is ‘dead’ without expecting it. While the rest of the world manages to develop it, here it is stagnating, and there is no good news for the future for the reasons we will show you now.

America takes on its biggest failure ever: This energy could not be generated in the country

As of the recent past, challenges to offshore wind energy in the United States have emerged, and thus its development as a key source of renewable electricity supplies has been doubted. Touted with great promises and great visions, the industry has faced significant hurdles that have led to the cancellation of projects, increased costs, and an overall slowdown of projects.

As of 2024, the United States has only two operational commercial-scale offshore wind farms: its proposed massive 30 MW offshore project in Block Island off Rhode Island and the 800 MW Vineyard Wind 1 off the Massachusetts’ coast. These projects are only tiny drops of the Biden administration’s plan to install 30,000 megawatts of offshore wind power by 2030.

The pipeline of planned projects has also felt the much-deserved losses; for instance, Eighty-three percent of the offshore wind projects in the pipeline were in Europe, according to data collected by the Offshore Renewable Energy Catapult; to date, over 12 gigawatts of projects have been canceled and constitute more than 50 percent of the pipeline’s capacity.

Current projects to generate offshore wind energy in America: Experts are clear that “all is not lost”

The unexpected wave of either project cancellations or renegotiation processes took quite a toll on the industry in 2023. Notable events include:

• Avangrid has paid $48.9 million in fines to Massachusetts for severing its loyalty to the Commonwealth Wind scheme.

• Ørsted has abandoned two large-scale projects near the coast of New Jersey.

• BP and Equinor are looking forward to reaping big by demanding contract adjustments on projects in New York.

These developments have resulted in substantial mishaps by turbine manufacturers and suppliers. Marc-André Victor, press officer of Siemens Energy, the largest offshore wind turbine manufacturer in the world, predicted potential losses of about $2.2 billion due to frequent project cancellations.

From what is happening to what could happen now: Some keys to understanding the situation

Several factors have contributed to the offshore wind industry’s difficulties in the United States:

• Costs are always on the increase, and so for the beneficiaries, there are always new economic challenges to face.

• TheLCOE for the newly subsidized US offshore wind projects was raised by nearly 50% in 2023 to $114 in 2021.

This significant cost increase has been driven by several factors:

• Inflation and the increased cost of doing business through the supply chain have been responsible for the increased capital outlay.

• As interest rates went up, the cost of financing also went up.

• The secured overnight financing rate (SOFR) was at 5.05% in mid-2023, as against near-zero in the levels that prevailed in 2020–21, when most of the project achieved offtake deals.

As you can see, offshore wind energy in America is being deployed at a much slower pace than might be expected. The problem now lies in making progress in its implementation, for which projects such as the one in New York will be of great help. All of this is to find alternatives to dangerous nuclear power, fossil fuels or even red hydrogen, which Japan is developing and in which we have shown a dangerous interest.