Feeds:
Posts
Comments

Posts Tagged ‘irrational exuberance’

Irrational exuberance revisited – the record breaking February 2022 Atlantic Wind sale

Posted in climate, energy policy, Offshore Wind, tagged , , , , , , , on April 21, 2025| Leave a Comment »

Bidding at the February 2022 Atlantic (NY/NJ) wind sale seemed incomprehensible given the economic and political uncertainties associated with offshore wind development.The 6 leases garnered bids ranging from $285 million to an astounding $1.1 billion, with total high bids of $4.37 billion! The Administration’s victory message correctly boasted that this was the “nation’s highest grossing competitive energy lease sale in history.”

The intense bidding was driven by the lure of subsidies, guaranteed power sales, unprecedented Federal and State promotion, peak climate activism, inattention to mounting public opposition, and irrational expectations regarding the role of offshore wind in powering the regional economy.

That wind bubble has since burst, as demonstrated by the lackluster (at best) August 2024 Atlantic sale, the disinterest in Gulf of America wind leases, and recognition of the costly realities of floating turbine projects in the Pacific. Any air that remained in the balloon was released following the Presidential election.

The table below summarizes the sale results and the current status for the 6 leases issued following the 2/2022 sale. One lease has been essentially terminated by the partners and the State. The other leases are in holding patterns in the planning phases.

high bidderlease #acresbid ($millions)status
Bluepoint Wind (EDP, ENGIE, Global Infrastructure Partners)053771,522765Site Assessment Plan (SAP) review
Attentive Energy
(Total and Corio Generation)		053884,332795Construction and Operations Plan (COP) review
Community Offshore Wind
(RWE, National Grid)		0539125,9641100no plans submitted
Atlantic Shores
(Shell, EDF)		054179,351780dead?
Invenergy
054283,976645no plans submitted
Vineyard Mid-Atlantic (Avangrid, Copenhagen Industy Partners)054443,056285COP review

The first US commercial offshore project, Vineyard Wind, has proven to be a major step backward for the wind industry. After being granted questionable financial and quality assurance waivers to reduce costs and “allow Vineyard Wind to adhere to its construction schedule,” the July 2024 turbine blade failure and subsequent lightning strike have raised new questions about the technology, industry, and regulatory regime. The report on the blade failure, which should arguably be a precursor to the resumption of Atlantic wind development, has yet to be released.

The one shining light, relatively speaking, for Atlantic wind development, has been Coastal Virginia Offshore Wind. That large project is on track to be completed at the end of 2026. Although the cost has risen about nine per cent, to $10.7 billion, that increase is understandable given the higher than anticipated costs for upgrading the onshore network.

Read Full Post »

Another major setback for offshore wind as Shell exits the Atlantic Shores project

Posted in energy policy, Offshore Wind, tagged , , , , on January 31, 2025| Leave a Comment »

The irrational exuberance that peaked at the Feb. 2022 New York Bight Wind Sale already seems like a distant memory.

In their quarterly earnings report released on Jan. 30, Shell disclosed a $996 million impairment associated with their withdraw from the controversial Atlantic Shores wind project offshore New Jersey.

Shell is no longer a participant in any US offshore wind projects. This leaves Equinor (2/3 Norwegian govt ownership) as the only major oil company pursuing US offshore wind development.

Those Atlantic states that have linked their economic future to offshore wind better be reassessing their energy strategy.

Read Full Post »

US Offshore wind: from irrational exuberance to economic reality

Posted in energy policy, Offshore Wind, tagged , , , on August 20, 2024| 1 Comment »

In the wake of last week’s lackluster Atlantic wind lease auction (summarized above), an excellent Renewable Energy World article documents the sharp decline in participation and bidding since the massive February 2022 sale of 6 leases offshore NY and NJ. That sale garnered bids ranging from $285 million to an astounding $1.1 billion, with total high bids of $4.37 billion! The sale was touted as the “nation’s highest grossing competitive energy lease sale in history.” The extravagant bidding, which made little sense then, seems downright irrational now.

Even the December 2022 California offshore lease sale, where development will be dependent on more expensive floating turbines, attracted substantially higher bids for leases (5) smaller than those auctioned last week.

The highly promoted Gulf of Mexico wind auctions were busts with the first sale receiving only one bid for $6.5 million and the second being cancelled due to lack of interest.

Major oil companies like bp and Shell seem to have exited the market for new US offshore wind leases. That leaves Equinor (2/3 Norwegian govt ownership) as the only major oil company pursuing US offshore wind leases.

In just 2 years, cost increases, coastal resident opposition, a troubling blade failure, and developer uncertainty have dramatically changed the outlook for US offshore wind. Nonetheless, the Administration’s wind advocates continue to sing from the same song sheet:

“Today’s lease sale reflects the forward momentum we are seeing to power millions of American homes with clean energy and create good-paying, climate jobs,” said White House National Climate Advisor Ali Zaidi. “With nine commercial-scale projects approved in the last three years and more to go, we are using every available tool to grow the American offshore wind industry as we strengthen the nation’s power grid and tackle the climate crisis.”

Read Full Post »