LONDON: A high-ranking executive at BP's renewable energy division expressed serious concerns about the state of the U.S. offshore wind industry, describing it as "fundamentally broken." The comments came as BP and its partner, Equinor explore opportunities to undertake substantial projects along the coast of New York, following an $840 million write-down of their project's value.
In recent times, the offshore wind industry, recognized as one of the fastest-growing sectors in the energy field, has grappled with a series of significant setbacks attributed to equipment reliability issues, supply chain disruptions, and substantial cost escalations.
On Wednesday, Orsted the world's largest offshore wind developer, indicated write-downs of up to $5.6 billion after suspending its US offshore wind project developments.
Anja-Isabel Dotzenrath, BP's Head of Gas and Low Carbon, identified a range of challenges facing offshore wind development in the United States. These included issues with permitting, delays in translating power purchase agreements into tangible projects, and the absence of inflationary adjustment mechanisms.
Speaking at the FT Energy Transition conference in London, Dotzenrath emphasized the urgent need for a comprehensive overhaul of the U.S. offshore wind industry, particularly in the areas of permitting speed and security.
She also disclosed that BP and Equinor are currently reviewing a new 10-point proposal put forth by US regulators. This proposal is designed to facilitate an "accelerated" project bidding process, potentially offering a way forward for the industry.
Meanwhile, at the same conference, Claudio Descalzi, CEO of Italian energy company Eni shared his perspective, highlighting that the costs associated with developing new offshore wind projects have doubled recently. Descalzi remarked, "Undertaking new offshore wind projects has become exceptionally challenging." In recent developments, the state of New York rejected the companies' request to increase the payments received by developers under power supply contracts for their large-scale projects.
Over the past week, BP recorded a write-down of $540 million, while Equinor incurred a $300 million impairment on their Empire and Beacon offshore wind projects. These projects collectively possess a capacity of 3.3 gigawatts, sufficient to power 2 million households. It is noteworthy that in 2020, BP acquired a 50% stake in this venture by investing $1.1 billion. _Reuters.
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