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Odd Lots

Here's What's Going Wrong in the US Offshore Wind Industry

Nov 22, 2023
Chelsea Jean-Michel, an offshore wind industry analyst at BloombergNEF, sheds light on the current struggles facing the U.S. offshore wind sector. She discusses rising commodity costs, project cancellations, and the impact of high interest rates on financing. Comparisons with the U.K. highlight the U.S. sector's regulatory challenges and bidding complexities. Jean-Michel emphasizes the need for strong state policies and a diverse energy approach to overcome these hurdles and effectively contribute to decarbonization efforts.
40:16

Podcast summary created with Snipd AI

Quick takeaways

  • The US offshore wind industry is facing challenges including higher borrowing costs and supply chain complications, leading to renegotiations or cancellations of projects.
  • Addressing the challenges in the US offshore wind industry requires exploring vessel solutions that satisfy Jones Act requirements, such as feeder barges and foreign wind turbine installation vessels.

Deep dives

Challenges facing the wind power industry

The wind power industry is facing challenges that include higher borrowing costs and higher component costs, leading to negative impacts on the industry. These challenges have caused offshore wind projects in the US to seek contract renegotiations or cancellations. The longer development timeline and macroeconomic environment changes have contributed to the growing difficulties. The impact of inflation, interest rates, and higher costs of capital on the levelized cost of electricity has increased the financial burden for the industry. However, it is expected that these challenges will be temporary, as the industry has experienced continuous cost declines in the past. Despite the current difficulties, wind power is an essential component of clean energy goals, especially in regions with limited sunlight, and it offers benefits such as high capacity factors and scalability.

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