In a major setback for the U.S. offshore wind industry, Danish wind energy developer ??rsted has announced the cancellation of its Ocean Wind I and II projects off the coast of southern New Jersey. The decision comes as a result of multiple challenges faced by the company, including problems with supply chains, higher interest rates, and failure to obtain the desired tax credits. Together, the two projects were expected to generate over 2.2 gigawatts of power. This comes on the heels of three wind power projects in New England being canceled due to financial feasibility concerns.

These cancellations pose a threat to the Biden administration\'s ambitious goals of powering 10 million homes through offshore wind energy by 2030 and establishing a carbon-free electric grid by 2035. This setback represents nearly one-fifth of President Biden\'s target of 30 gigawatts of offshore wind power by 2030. However, despite these challenges, the White House remains optimistic about the future of offshore wind in the U.S. The Interior Department has recently approved the nation\'s largest planned offshore wind farm in Virginia, and new offshore wind lease areas have been announced in the Gulf of Mexico.

Industry experts acknowledge that reaching the 30-gigawatt target by 2030 may be unlikely, but believe that a significant increase in offshore wind power is still attainable. The current outlook is estimated to be around 20 to 22 gigawatts or more by 2030. This would still be a substantial increase from the current capacity, which consists of only two small demonstration projects providing a fraction of a single gigawatt of power.

Offshore wind farms are central to the government\'s plans for renewable energy, particularly in densely populated East Coast states with limited land for traditional wind turbines or solar arrays. Eight East Coast states have offshore wind mandates committing them to adding a combined capacity of over 45 gigawatts. The setbacks faced by the offshore wind industry highlight the challenges of transitioning to renewable energy sources and the reliance on fossil fuel-burning power plants in the interim.

The cancellations also highlight the economic challenges faced by offshore wind developers. High inflation, supply chain disruptions, and rising costs of capital and building materials have made projects more expensive. ??rsted alone is writing off $4 billion due to the cancellation of the New Jersey projects. Developers are calling on the federal government to ensure that the industry can take advantage of tax credits and other incentives under the Inflation Reduction Act to help offset these increased costs.

Despite the setbacks, there are still ongoing offshore wind projects in various stages of development. The Coastal Virginia Offshore Wind project, the nation\'s largest offshore wind project, has received approval from the Biden administration. ??rsted is also moving forward with the construction of Revolution Wind, Rhode Island and Connecticut\'s first utility-scale offshore wind farm. New York state has recently awarded 4 gigawatts of offshore wind capacity as part of its goal to obtain 70% of its electricity from renewable sources by 2030.

Environmental advocates emphasize the urgency of offshore wind development to improve air quality and reduce reliance on fossil fuels. Any delay in offshore wind projects prolongs the use of polluting power plants. New Jersey, in particular, remains committed to offshore wind despite the cancellations. Additional offshore projects are still being considered by the state\'s utility regulators.

While the cancellation of the ??rsted projects is a setback for the industry, there is still momentum for offshore wind in the U.S. due to the quality of wind resources and the growing demand for clean electricity. Offshore wind developers are confident that the industry will thrive, although it may progress at a slower pace than initially anticipated. The overall goal of transitioning to clean energy and reducing carbon emissions remains a priority for the Biden administration.