Like the proverbial skunk at a garden party, reality has disrupted the offshore-wind fantasy. After announcing a potential $2.3 billion write-down on its U.S. offshore-wind projects, Ørsted CEO Mads Nipper said that it was “inevitable” that consumers would need to pay more for renewable energy, since offshore wind “faces cost increases in orders of magnitude.”
Nipper’s confession makes a jarring contrast with claims made about offshore wind’s costs only a few years ago. In 2017, Michael Liebrich told BloombergNEF that green-energy costs were at a “tipping point” and had fallen below those of fossil fuels as technology “slash[ed] the costs” of offshore wind and solar. “One of the reasons those offshore wind costs have come down to be competitive without subsidies,” Liebrich said, “is because these turbines are absolute monsters.”
Even before supply-chain woes, crippling inflation, and inevitably higher interest rates intervened, the promise of rapidly declining costs driven by ever-larger turbines was always a delusion. In Europe, as University of Edinburgh economist Gordon Hughes documents, wind energy’s capital costs have risen over time, and newer and larger offshore wind turbines have regularly broken down.