How will offshore wind fare under a second Trump term?

Few clean energy sectors have been threatened as directly by Donald Trump as offshore wind. The president-elect vowed on the campaign trail to end offshore wind development via executive order ​“on day one” of his second term.

Trump has nurtured a hatred for the industry since at least 2006, when he began fighting a wind project off the coast of his golf course in Scotland. He waged a years-long legal battle to block it and ultimately lost before the U.K. Supreme Court in 2015.

But could the Trump administration really stop offshore wind in its tracks?

Experts say Trump won’t be able to deliver on his campaign promise to kill off the industry in a single day, but his administration could stop some development and make things much harder for proposed and planned projects. This, in turn, could stall development of a clean energy resource that is expected to be cheaper than fossil-fueled power once it scales up. That would be good news for power plants that want to protect their market share from cheaper and cleaner competition, but bad news for tens of millions of utility customers and the broader economy.

The Biden administration set a goal of installing 30 gigawatts of offshore wind by 2030, an energy source that is core to several coastal states’ decarbonization plans. This sector in the U.S. is fast-growing — tens of billions of dollars in public and private investment have poured into it in recent years. But it’s still a new industry here, and supply-chain problems and inflation-driven cost escalations have led to project delays and cancellations. Because of those challenges, offshore wind development is already far off-track to meet federal and state goals.

And now comes a newly hostile political environment.

The federal government controls the waters off U.S. coastlines, so it can dictate the siting of offshore wind projects — a notable difference between offshore wind and other types of clean energy. The U.S. Department of Interior puts potential wind development sites out to bid in lease sales.

The Trump administration will have the power to halt those lease sales, and it will be able to slow the processing of key federal permits for projects already in the pipeline.

“There’s a sense that this change will bring a lot of regulatory uncertainty at the federal level,” said Jeremy McDiarmid, managing director and general counsel for Advanced Energy United. ​“All these things create uncertainty in the marketplace, and that makes financing more expensive.”

Shares of European wind-power giants including Danish energy firm Ørsted and wind-turbine manufacturers Vestas and Nordex fell after Trump’s victory, following a broader pattern for clean energy stocks, as markets reacted to fears of a rollback of U.S. clean energy incentives.

Trump’s pledge to end the industry came during a May campaign stop at a New Jersey coastal resort city that’s been fighting offshore wind development over concerns that it’ll harm the fishing industry and spoil views from shorefront properties. During his speech, Trump repeated a claim from offshore wind opponents that the projects kill whales — a theory that federal researchers have debunked.

How realistic are Trump’s threats?

“Trump statements of ​‘I’m going to end offshore wind on day one’ — that cannot happen,” said John Northington Jr., government affairs adviser and member of the public policy and law practice group at K&L Gates.

After they’re signed, executive orders face potential legal challenges that can delay implementation, Northington said. That process takes time and may not lead to the intended result. Northington has relevant experience: He was previously an adviser at DOI, which oversees the Bureau of Ocean Energy Management (BOEM), the agency responsible for managing offshore wind leases.

“Look at what President Biden was saying on the campaign trail to end offshore oil and gas,” he said. Despite that pledge, ​“we’ve never been producing more oil and gas on federal lands,” an example of the gap between campaign promises and governing outcomes.

Early in his term, Biden issued an executive order calling for a halt to federal offshore drilling leases and review of offshore oil and gas policy. But after more than a year of back-and-forth legal battles, the order was mooted by the passage of the Inflation Reduction Act, which contains provisions that link expanding offshore drilling leases with expanding offshore wind leases.

Trump has also said he will undo the Inflation Reduction Act, a move that would strip hundreds of billions of dollars of federal clean-energy tax credits from clean energy sectors, including offshore wind. Most industry and political observers have discounted the odds of a full repeal, however, since the majority of the investments spurred by the law’s tax credits and incentives are in Republican states and congressional districts.

Losing tax credits would harm wind more than other energy sectors, according to a BloombergNEF report released the week before the election. ​“Offshore wind is more vulnerable to tax-credit repeal because it’s more capital-intensive, there is higher reliance on policy, and there is greater site-specific resource dependency,” Atin Jain, BNEF wind power specialist, told Canary Media. The research firm estimates that a full repeal of the IRA’s tax credits could cut its current forecast of 39 gigawatts of offshore wind in the U.S. by 2035 nearly in half, to 21.5 gigawatts, he said.

Even if the IRA’s tax credits for offshore wind aren’t repealed, projects that have yet to secure permits from BOEM could face challenges, said Felisa Sanchez, counsel in K&L Gates’s maritime and finance practice groups.

“With Trump, the primary concern is a set of delays — permitting delays, approval delays,” she said.

This dynamic occurred during the first Trump administration, when industry backers accused BOEM of ​“slow-walking” offshore wind permits for the 806-megawatt Vineyard Wind farm in Massachusetts, the first U.S. project to approach anything close to the scale of Europe’s offshore wind installations.

Future permitting snags could cause problems for other projects being planned off the Massachusetts coast such as SouthCoast Wind, a 2.4-gigawatt project that expects to have all its necessary permits by mid-2025.

Deutsche Bank analysts wrote in a note to clients that offshore wind projects now under construction were likely to move ahead, while those slated to be completed in 2030 or later were likely to face further regulatory delays, Reuters reported.

Analysts with Marathon Capital, an investment firm focused on clean infrastructure, took a more pessimistic view in a Nov. 6 research note. ​“Trump has been most specific about his opposition to offshore wind,” the analysts wrote. ​“We’d expect future development in federal waters to effectively be halted.”

All this uncertainty could make offshore wind financing more expensive, McDiarmid said. ​“There is a significant amount of power that the federal government can wield around permitting and leasing at BOEM, around defending the federal government in lawsuits by entities trying to hold up offshore wind projects. And the last piece is the IRA tax credits.”

U.S. offshore wind is at a tipping point 

The nascent U.S. offshore wind industry is now in a precarious position.

“There’s been billions of dollars of investment on the infrastructure side — port development, manufacturing facilities, shipyard investment, vessels being built and retrofitted for the offshore wind space,” Sanchez noted.

But it’s not clear that those investments have yet reached the scale to make the industry as cost-competitive as Europe’s fully fledged offshore wind sector has become. ​“With current interest rates and the uncertainty in the industry, it creates a situation where industries have a bit of hesitation jumping in, and lenders and investors have been hesitant to advance funds,” Sanchez said.

Cape Wind, the first offshore wind project attempted in the U.S., applied for its first permit in 2001 and spent the next 14 years in legal battles before throwing in the towel in 2015. To date, only three offshore wind installations have come online in U.S. waters: a 12-megawatt pilot project near Virginia, the 30-megawatt Block Island project off the coast of Rhode Island, and the 132-megawatt South Fork Wind project, owned by Danish energy giant Ørsted and Boston-based utility Eversource, which started generating power off the Rhode Island coast earlier this year. That makes for just 174 megawatts of offshore wind in the U.S. so far.

Far more is in the works. According to the National Renewable Energy Laboratory, 4.1 gigawatts of offshore wind projects were under construction at the end of May 2024, a more than threefold increase since May 2023. That includes Vineyard Wind, which began producing power from five turbines early this year but paused generation and further construction after a wind-turbine blade failure. It also includes Ørsted’s 704-megawatt Revolution Wind, which will supply electricity to Connecticut and Rhode Island, and utility Dominion Energy’s 2.6-gigawatt Coastal Virginia Offshore Wind.

This is a fraction of the nearly 35 gigawatts of offshore wind built in Europe. It’s also a fraction of what states are planning. A July report from the American Clean Power Association noted that the 11 states with offshore wind targets are aiming to bring 84 gigawatts online over the next two decades, and about 56 of those gigawatts are in some stage of development.

NREL has estimated that offshore wind could provide up to 8 percent of the country’s power by 2050 and 20 percent of the power along the Atlantic coast. Offshore wind is especially vital for densely populated East Coast states because they lack the expanses of land needed for onshore wind and solar farms. New York state’s mandate to achieve 100 percent carbon-free energy by 2040 relies on building 9 gigawatts of offshore wind by 2035 — the most ambitious near-term goal in the country.

Offshore wind has brought thousands of jobs and $40 billion in investment to the U.S. thus far, Liz Burdock, CEO and president of the Oceantic Network, a nonprofit focused on offshore wind and ocean renewables, noted in a statement on Nov. 6.

BOEM leases also generate revenue for the federal government, including $456 million from the first three offshore lease sales held under the first Trump administration.

“The Oceantic numbers are a reflection of the breadth of the industry,” McDiarmid said. ​“And it’s not just planning. There are construction projects happening. There are electrons flowing, and continued procurements happening.”

Nor is the investment limited to majority-Democratic states such as Massachusetts and New York, he said. Ports in Virginia and Louisiana are planning offshore wind hubs, and the first purpose-built U.S. ship for offshore turbine installation is being constructed in Brownsville, Texas. Virginia Gov. Glenn Youngkin, a Republican, has affirmed his support of the industry, which has drawn a South Korean transmission-cable manufacturer to build a factory in the state.

But rising interest rates and supply-chain shortfalls after the Covid-19 pandemic drove up costs for the industry, leading to gaps between the price of power that projects had promised and the price at which they could actually deliver.

This disruption led to canceled contracts in 2023 from projects in Connecticut, Massachusetts, and New Jersey that added up to 5.5 gigawatts of capacity, along with the renegotiation of 6.5 gigawatts’ worth of projects in Connecticut, Massachusetts, New York, and Rhode Island.

While new offshore wind procurements have since been conducted in Massachusetts and Rhode Island as well as in New York, another series of projects off the New York coast were canceled this spring. Weaker offshore wind prospects also led BOEM to stop lease sales off the coast of Oregon and in the Gulf of Mexico this year.

Hitting high offshore wind targets like those set by the Biden administration and the states would require both ​“stringent decarbonization policies” and lower costs for the industry as a whole, among other factors, NREL researchers found last year. A lack of federal policy support would likely make it harder for the industry to reach a scale that would result in lower costs.