A company behind Sunrise Wind and other green energy projects off Long Island has posted substantial losses and is bailing out of the wind energy sector. Under increasing pressure from inflation, supply chain issues, and the inability to convince regulators to increase ratepayer costs for the energy it produces, New England-based Eversource reported a $1.6 billion loss for its offshore wind operations for the fourth quarter of 2023.
Eversource’s partner in Sunrise Wind, the Denmark-based Ørsted, previously announced more than $4 billion in impairment charges in its wind assets and has already discontinued two projects, Ocean Wind 1 and 2, planned off New Jersey. “A further adverse development of the Sunrise Wind project may potentially lead to us ceasing the project and incurring cancellation fees, thereby negatively impacting earnings,” Ørsted stated in its quarterly report to shareholders.
Sunrise Wind was announced with great fanfare, with Brookhaven Town expected to receive $130 million in impact fees for hosting an underground cable coming in at Smith Point from the turbine location 124 miles away off Montauk. Suffolk County is expected to take in $40 million over the 25-year lifetime of the 90-unit generating system.
Ørsted was also in partnership with Eversource on Southfork Wind, which has six of its dozen planned turbines operating and sending power to Eastern Long Island. Their other East Coast effort, Revolution Wind, is currently proceeding as planned. Ørsted’s stock price has cratered in the past year, dropping from $34.06 to $19.19 per share. Also a publicly traded company, Eversource saw its stock price tank in the last year from $83.73 per share to $56.88.
“Wind investment dropped 35% over the past year as projects bore the brunt of headwinds from higher costs and permitting challenges,” according to an analysis from the professional services company Deloitte. “Offshore wind faces high capital requirements, long project development and permitting timelines, and locked-in power sales contracts. Developers executing agreements signed during low inflation now face higher financing costs and a 40% jump in equipment and construction costs over the past year, while state policymakers may not be willing to provide additional support that could increase consumer costs.”
The Sunrise Wind companies are not alone in struggling to make wind work in the U.S. The principals of Empire Wind, Equinor and BP, announced they are getting out of their deal to build turbines 14 miles off Jones Beach. According to Deloitte, “Federal and state action to expedite permitting, ease financing, and adjust incentives may be needed to keep projects in the pipeline and on track for meeting targets.”
Rather than approve an increase in the cost for the wind power, the New York Public Service Commission said it would rebid the offshore projects. The companies involved all reported that they are weighing their options to rebid. Eversource said it has found a buyer for its wind assets, and decisions on continuing with its projects would be left up to them.