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President Trump’s executive order on offshore wind continues to have impacts, with a parent company of SouthCoast Wind this week announcing to investors a more than $260 million reduction in the value of its North American portfolio, which includes three U.S. offshore wind projects. The action reflects the company’s assumption that the Trump administration may cause years of delays in offshore development.
In simple terms, the value of an offshore wind farm hinges on two factors: what the expected revenue will be, and when that revenue is expected to start coming in. Delays to when an offshore wind project comes online and starts generating electricity mean delayed revenue, which makes the asset worth less at present. That’s why the company announced the reduction in value, also known as an “impairment” or “write down.”
The parent company, EDP Renewables, told investors it assumed a four-year delay under the new administration as a worst-case scenario. However, this does not mean the project is adopting a four-year delay, as another news outlet erroneously reported. SouthCoast Wind plans to move forward to the degree it can, including finalizing an agreement (known as a power purchase agreement or PPA) at the end of March with Massachusetts to purchase the project’s power.
An EDP Renewables executive told investors during this week’s call that the PPA incorporates language to protect against possible scenarios in which Trump threatens Inflation Reduction Act funding, a significant source of support to the industry.
“Ocean Winds confirms … an impairment loss of €267 million of its U.S. assets’ fair value,” said company president Michael Brown in an email to The Light on Thursday. Ocean Winds, a parent company of SouthCoast Wind, is also developing Golden State Wind in California and Bluepoint Wind south of New York.
Publicly traded companies are required to report such information to investors. Brown cited changes to the regulatory environment and Trump’s Jan. 20 executive order, noting the impacts of it are “not yet known.”
The executive order directs Interior Secretary Doug Burgum to “conduct a comprehensive review of the ecological, economic, and environmental necessity of terminating or amending any existing wind energy leases, identifying any legal bases for such removal, and submit a report with recommendations to the President.” It also orders a freeze of all federal leasing and permitting for offshore wind projects.
The Interior Department previously declined to provide information on Burgum’s review and its timeline when questioned by The Light.
“The impairment decision is a precautionary measure based on a scenario of potential delays in its projects,” Brown said. Ocean Winds “strongly believes in the potential of offshore wind to generate significant economic activity and provide abundant, domestic energy to meet rapidly growing demand in the U.S. and remains confident in finding a path forward in coordination with all relevant authorities in the upcoming months.”
Whether that path opens or not depends significantly on federal action (or four years of inaction).
Abby Watson, an offshore wind industry veteran and president of the Groundwire Group, a consulting firm in climate and sustainability, said this impairment is a clear example of the Trump administration’s impact.
“Some of the early actions from the new administration have created a lot of uncertainty for developers, even once those developers have all of those permits and in a lot of cases have signed contracts,” Watson said.
SouthCoast Wind received its remaining major federal approvals on Jan. 17, the final business day of the Biden administration. But it still needs a key permit from NOAA Fisheries (an incidental harassment authorization) in order to construct offshore. Offshore wind opponents are lobbying Burgum to revoke such permits, claiming harm to endangered whales.
Two other companies with offshore wind projects recently announced impairments: EDF Renewables for a New Jersey project (which its other funder, Shell, decided to abandon), and Orsted for its Sunrise Wind project south of New York.
“It’s a really difficult position to be in as a developer,” Watson said. “The executive order kind of requests this review of all of the existing permits and leases and indicates there will be potentially a pause on new approvals … so it’s a big risk for developers to make a choice to proceed without knowing where the executive order will land and what the result of [the Interior Department’s] review will be.”
Watson said Trump’s executive order and its impacts should concern industries beyond offshore wind.
“If we’re seeing a U.S. government that is no longer willing to uphold agreements and contracts it executed under the prior administration, that’s a huge dampening effect on potential investment across so many sectors,” she said. “It raises a lot of questions for developers and investors about whether we can trust the commitment that we’ve received from the federal government.”
Locally, SouthCoast Wind intends to create union jobs, hire New Bedford fishermen, and use the under-construction Foss terminal in the city for long-term project operations and maintenance.
A fall 2024 press release from the company stated project construction was expected to start in late 2025 once it received all federal, state and local permits.
The project has an agreement with the Massachusetts Clean Energy Center to occupy the terminal in New Bedford for offshore construction starting in 2029, paying about $12 million in rent per year. The 29-acre site is currently being used by Vineyard Wind.
SouthCoast Wind’s lease is about 30 miles south of Martha’s Vineyard. The first phase is to develop 1,200 megawatts. Ultimately, the project plans to install up to 141 turbines, which could power more than 800,000 homes in Massachusetts and Rhode Island.
Email Anastasia E. Lennon at alennon@newbedfordlight.org.
Offshore Wind is neither green nor clean. Nuclear is the only option.
How many people have been killed by offshore wind?
Nuclear?
Nuclear is mature technology.
When was the last newbuild?
Shutdown?
Was it wrong to shutdown Plymouth?
Fukushima?
Chernobyl?
Nantucket still has issues, Section 106 of the SouthCoast Wind BOEM permit and legal action may be in the future. The blade safety questions of Vineyard Wind by the Bureau of Safety and Environmental Enforcement (BSEE) have never been answered. The blade issues show a lack of safety issues in the SouthCoast wind permit, before the completion of the investigation. There are no Rhode Island permits
It’s time to put Offshore Wind behind us and protect and preserve our oceans, bays, waterways, coastlines, beaches, and sea life.
Do you mean like investors who financed the Keystone XL pipeline? There was O consideration for those investors, and employees when Biden ended the project with the stroke of a pen. Since all parties involved in Massachusetts & RI offshore wind are far more concerned with profits than Green energy, and the Massachusetts House, Senate, and Governor couldn’t care less about consumer gas & electric prices, I hope the project suffers major losses when a Republican governor replaced the Tax & Spend policies of Maura Healy, and the rest of those useless lawmakers on Beacon Hill who forgot that they work for the Massachusetts tax payers!!!
Before the first turbine went up, OSW expected total output was considered to be negligible in the scheme of things but the Green Team doubled down and poured billions of dollars into it, all going to foreign manufacturers and installation vessels / crews. The piles were made in Portugal, the blades in Canada and France. GE built the turbines in the US, but all this was installed by European firms. How many U.S. jobs have really materialized?
Consumers are paying 13.4 cents for our electricity right now and the bills are sky-high. The latest estimate for cost per kilowatt hour to the public utilities is 15 cents, which will surely go up before it’s actually fed into the grid. They will be paying more for the electricity wholesale than we are paying for our homes right now. It is not, and will not be affordable energy.
Another variable to consider is how long will these turbines be productive before they need to be replaced and what will the cost be then? Land-based power plants even nukes, run for 5o years or more before they need to be replaced. Can we expect that from turbines in an ocean environment 20 miles offshore? I think not. OSW is not an efficient energy source, and is not environmentally friendly.