With an order to halt work on a wind farm off the coast of New York, the Trump administration dealt the offshore wind industry a damaging blow that puts $28 billion of investment at risk.
On Wednesday, Interior Secretary Doug Burgum posted on X that he’d ordered a pause on Equinor ASA’s Empire Wind project off Long Island. The project was already well underway – permits and supplies lined up, $3 billion in project financing agreed and the construction phase had begun.
While Trump had made clear that early-stage developments would be slowed or thwarted, it has come as a shock to the industry that the President would stop a project in full swing.
Just a few years ago, the US was seen as one of the most attractive growth markets for European energy companies looking to expand a technology developed in the North Sea. Now, soaring costs paired with political animosity, make the outlook for the sector seem dire.
“The halting the permit for Empire Wind 1 just as it gears up for construction and as fabrication of components is already is in full swing is another unprecedented and escalatory step against offshore wind in the US,” Raya Peterson, global lead for offshore wind at consultancy Ramboll, said in a post on LinkedIn. “It’s destroying American jobs and domestic energy production. On top it raises doubts that the US is a serious partner for business.”
It’s a sharp reversal from the Biden administration, which had vowed to develop some 30 gigawatts of offshore wind in the US by 2030, a policy that led to billions of dollars of investment in projects and the supply chains needed to deliver them. States on the east coast of the US had seen the wind farms at sea as a key way to boost much-needed power supply growth as well as reach climate goals.
Empire Wind is one of just a handful of projects currently being built in the US. In total, the projects would require over $28 billion of investment, according to analysis from BloombergNEF and public statements.
Equinor said in a statement Thursday that it’s halting construction on Empire and is considering its legal remedies, including appealing the order. The company also said that the total amount drawn under the project’s term loan was about $1.5 billion and that in a full-stop scenario that money would be repaid from the equity commitment to the project’s lenders.
On his first day in office, President Trump signed an executive order to stop federal permitting and leasing for new offshore wind projects in the US. The order also called for a review of those projects that had already been approved. Secretary Burgum said in a second post on X Wednesday that his department is doing its part to make sure that the review is carried out.
That sharp reversal threatens to chill investment in the US long after Trump leaves office, according to Timothy Fox, managing director of ClearView Energy Partners research firm. Project developers may become wary of making major long-term investment decisions in a sector that has strong electoral risks.
“Even if the next administration has Biden-like enthusiasm, developers may be concerned,” Fox said in an interview. “This could have long ripple effects.”
The decision to halt Empire’s development also creates uncertainty in other energy sectors beyond wind and likely unnerved the bankers who provide financing to big energy projects, Fox said.
“This could have echo impact into other industries,” Fox said. “It injects uncertainty not only in this administration, but in future administrations that may no longer favor a resource that’s currently in favor.”
The notice to halt work on Equinor’s Empire Wind project could foreshadow conflicts over the other offshore wind farms currently under construction. That includes the nearly completed Vineyard Wind, being developed by Copenhagen Infrastructure Partners, Iberdrola SA’s Avangrid unit and the Coastal Virginia Offshore Wind, which is being built by Dominion Energy. Denmark’s Orsted A/S is building two projects, Revolution Wind set to be completed off the coast of Rhode Island next year and Sunrise Wind scheduled for completion in 2027 near New York.
Stock exchanges in Oslo and Copenhagen are closed Thursday, so it’s not yet clear if there will be a market impact.
“This news comes as a further setback for the US offshore wind industry and has a negative read-across for Orsted’s Revolution Wind and Sunrise Wind projects currently under construction” Jenny Ping, analyst at Citigroup Inc. said in a note. “We also see risk of higher equity risk premiums for US assets if the US government were to rollback previously made decisions.”
Ping added that given how far developed those wind farms are, it would cost Orsted roughly the same to build the projects as it would be to walk away.
In 2023, Orsted decided to halt development of two major projects in the US because soaring costs had made them not viable. The crisis for Orsted led to billions of dollars of losses and replacement of its senior management.
In an interview last week, Orsted’s Chief Executive Officer Rasmus Errboe said that the company was “100% committed” to delivering the two wind farms, but that the company would take a cautious approach to any future development in the US.
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