A conversation with ORE Catapult’s Energy Economist Ken Kasriel and Head of Research (Renewables) at Brinckmann Group, Shashi Barla.
After years of falling offshore wind (OSW) costs, inflationary pressures which have been accumulating since 2021 are now forcing developers outside of China to ask for new project terms, as the prices they had agreed to sell power for no longer make the projects economic, or as economic as first thought.
In a series of public statements since mid-2022, and accelerating since December, four developments in the US – the world’s largest OSW emerging market – have given off distress signals, with a further two reportedly facing trouble. Total capacity involved is 7.4 MW, or 25% of the US goal for 30 GW of OSW operating by 2030.
All but one are close neighbours in what is arguably Americas’ best OSW real estate, from a wind- and water depth-perspective.
In the first major public trans-Atlantic echo of this trend, on 3 March 2023, Ørsted publicly asked the UK Government, via a news interview, for improved fiscal terms, without which its planned 2.8 GW Hornsea 3 “would have to go on hold,” due to cost pressures since it agreed to a fixed power tariff in July 2022. This would be unprecedented for a project of this scale, and from such a big developer.
This paper highlights some of the discussions between Ken and Shashi, including: