The Trump administration has dealt a devastating blow to the offshore wind industry by orders to stop working on wind farms off the coast of New York, putting $28 billion in investment at risk.
On Wednesday, Home Secretary Doug Burgum posted on X, who ordered a stop on the Empire Wind project in Equinor Asa near Long Island. The project has been going well – with licenses and consumables lined up, agreed to a $3 billion project financing, and the construction phase has begun.
While Trump made it clear that it would slow down or thwart early developments, the industry astonished that the president would make a project in full swing to block one.
Just a few years ago, the United States was seen as one of the most attractive growth markets for European energy companies looking to expand North Sea technology. Now, the soaring costs combined with political hostility make the industry’s outlook look bad.
“Stop the Imperial Wind’s license, just as it is ready for construction, is an unprecedented step in the U.S. as the manufacturing of components is already in full swing. “It is undermining U.S. work and domestic energy production. Most importantly, people suspect that the United States is a serious partner in business. ”
It was a sharp reversal with the Biden administration, which vowed to develop about 30 GW of offshore winds in the United States by 2030, a policy that led to billions of dollars in project investment and the supply chains needed to deliver them. States on the East Coast of the United States view offshore wind farms as a key way to increase much-needed power growth and achieve climate goals.
Imperial Style is one of the few projects currently being built in the United States. According to analysis by Bloomberg and the public statement, a total of more than $28 billion in investment is required.
Equinor said in a statement Thursday that it was stopping the empire construction and was considering its legal remedies, including appeals to the order. The company also said that the total amount of term loans under the project is about $1.5 billion, and will be repaid from equity commitments to the project lenders around the clock.
On his first day of office, President Trump signed an executive order to stop federal licenses and lease new offshore wind projects in the United States. The order also requires review of those items that have been approved. Secretary Burgum said in his second post on Wednesday that his department is working to ensure that the review is underway.
Timothy Fox, managing director of Clearview Energy Partners research, said the keen reversal could relax investment in the U.S. long after Trump left the office. Project developers may make significant long-term investment decisions in departments with strong election risks.
“Even if the next administration has Biden-like enthusiasm, developers may be worried,” Fox said in an interview. “This could have a long-term ripple effect.”
Fox said the decision to stop the empire’s development also brought other energy sectors beyond the wind and could dissatisfied bankers with financing for large-scale energy projects.
“This could be a response to other industries,” Fox said. “It not only injects uncertainty into this administration, but it may no longer benefit current favorable resources in future administrations.”
Announcement to stop working in Equinor’s Imperial Wind Project may herald a conflict in other offshore wind farms currently under construction. These include the vineyard wind of offshore vineyards built by Copenhagen infrastructure partners, the Avangrid unit of Iberala SA and the offshore vineyards built by Dominion Energy. Denmark’s Orsted A/S is under construction, with Revolutionary Wind set to be completed next year at the Rhode Island coast chassis and is scheduled to complete Sunrise Wind near New York in 2027.
Stock exchanges in Oslo and Copenhagen closed Thursday, so it is unclear whether there will be market impact.
“This news is a further setback to the offshore wind industry in the U.S., with a negative reading for the Orsted Revolution Wind and Sunrise wind projects currently under construction,” said Jenny Ping, an analyst at Citigroup Inc.. “If the U.S. government made a previous decision, we would also see the risk of a higher equity risk premium for U.S. assets.”
Ping added that given the extent to which these wind farms are developing, the construction project will cost roughly the same, like walking away.
In 2023, Orsted decided to stop developing two major projects in the United States, as soaring costs made them unfeasible. Orsted’s crisis has resulted in billions of dollars in losses and replacement of its senior management.
In an interview last week, Orsted CEO Rasmus Errboe said the company is “100% committed to delivering both wind farms, but the company will be cautious about any future developments in the U.S..”
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