Orsted settles claims over US offshore wind cancellations; Siemens Gamesa to cut 4,100 jobs

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Orsted settles claims over cancelled New Jersey projects

Denmark's Orsted has agreed to pay New Jersey $125 million to settle claims over its cancellation of two offshore wind projects.

The New Jersey Board of Public Utilities (NJBPU) said in a statement that the funds will be invested in wind component manufacturing facilities and wind farm projects.

The settlement comes seven months after Orsted canceled Ocean Wind 1 and 2 off the coast of New Jersey, citing soaring inflation, rising interest rates and delays in securing installation vessels.

          Offshore wind projects in US Mid-Atlantic 

                                (Click image to enlarge)

Source: Department of Energy's 2023 Offshore Wind Market Report, August 2023.

The cancellation of the projects, which had a total production capacity of 2.2 GW, dealt a blow to New Jersey’s plan to install 11 GW of offshore wind by 2040.

The administration of Governor Phil Murphy said it would speed up offshore wind procurement plans by soliciting bids for new projects in the second quarter of 2025, more than a year ahead of schedule.

In April, New Jersey launched its fourth offshore wind auction to secure between 1.2 GW and 4 GW of clean power. Developers must submit their offers by July 10 and awards are scheduled for December.

NJBPU also said it would pause an offshore wind transmission planning initiative with regional power grid operator PJM Interconnection while it considers the impact of new federal rules that adjust how large power lines are approved and paid for.

The regulations issued by the Federal Energy Regulatory Commission (FERC) last month aim to lower barriers to grid investments by allowing grid operators to share the costs with the states and generators that will benefit from the new infrastructure.

Construction starts on Brooklyn offshore wind port

Construction has begun on Equinor's South Brooklyn Marine Terminal (SBMT), a dedicated offshore wind port in New York.

The SMBT will support Equinor’s 810 MW Empire Wind 1 offshore wind project and will become a hub for the nascent offshore wind industry in the U.S. Northeast, the Norwegian oil and gas company said.

The site will feature an area to pre-assemble turbine components for Empire Wind 1, an onshore substation that will inject clean power into the grid and installations to support operations and maintenance (O&M). Empire Wind 1 is slated to start producing power in late 2026.

“This construction will result in union jobs and local economic benefits while supporting a project that will deliver homegrown power to New Yorkers and position the state as a leader in the advancing offshore wind industry,” Equinor Renewables Americas President Molly Morris said.

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In late February, New York authorities awarded new power contracts to Empire Wind 1 and Orsted's 924 MW Sunrise Wind in a competitive auction. The companies bid for new contracts after surging costs made contracts allocated in 2019 uneconomical.

Empire Wind 1 and Sunrise Wind will earn $150.15 per megawatt hour under the new 25-year contracts, far higher than the $110.37MW/h price awarded to Sunrise Wind in 2019.

The projects are part of New York’s plan to install 9 GW of offshore wind capacity by 2035. The state’s first commercial offshore wind facility, the 130 MW South Fork wind farm (Orsted and Eversource), began producing power in December 2023 and construction was completed in March this year.

US advances Mid-Atlantic offshore wind auction

The Bureau of Ocean Energy Management (BOEM) has completed environmental assessment studies for an offshore wind lease auction in the Central Atlantic later this year.

Since President Joe Biden took office in 2021, BOEM has held four offshore wind lease auctions on the East Coast and one each on the Pacific and Gulf of Mexico coasts.

Environmental studies have now been completed on an offshore wind area near Delaware and Maryland and a second area off the coast of Virginia.

BOEM and the state of Maryland also plan to identify additional offshore wind lease areas, they said.

“Continued collaboration at this level is critical to ensuring more areas are opened and Maryland can achieve its targets,” the Oceantic Network said in a statement referring to state plans to source only renewable energy by 2035.

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The Department of Interior (DOI) plans to hold 12 offshore wind lease sales by 2028, it said in April.

The DOI's schedule calls for four lease sales in 2024 (Central Atlantic, Gulf of Maine, Gulf of Mexico, and Oregon), one each in 2025 and 2026 (Gulf of Mexico and Central Atlantic, respectively), two in 2027 (Gulf of Mexico and New York Bight) and four in 2028 (California, a U.S. Territory, Gulf of Maine, and Hawaii).

Siemens Gamesa to cut 4,100 jobs

Turbine wind supplier Siemens Gamesa plans to cut 4,100 jobs, or around 15% of its workforce, due partly to a slowdown in demand.

In an internal memo seen by Reuters, Chief Executive Jochen Eickholt told staff the German company needs “to adapt to lower business volumes, reduced activity in non-core markets, and a streamlined portfolio.”

In recent years, Western turbine makers including Siemens Gamesa, Vestas, and GE Vernova have faced supply issues, higher costs, strong competition from Chinese rivals, and low installation rates in key markets, including the European Union and the United States.

Siemens Gamesa is the largest supplier of offshore wind turbines to date and in June 2023 the company reported that quality issues affected between 15% and 30% of the more than 132 GW of turbines that the company had deployed worldwide.

    Global offshore wind turbine market share for operating projects (end of 2022)

                                                                 (Click image to enlarge)

Note: SGRE = Siemens Gamesa.

Source: U.S. Department of Energy's Offshore Wind Market Report, 2023 Edition (August 2023)

In May, Siemens Energy unveiled a plan to restructure Siemens Gamesa to ensure a path to profitability and warned about potential job cuts.

But in the internal memo, Eickholt, who is set to step down at the end of July, sought to assure staffers that despite the job cuts the company’s wind energy operations, both for onshore and offshore, “have a future.”

EU approves Italian support measures for offshore wind

The EU has approved a plan by Italy to provide financial incentives for 4.6 GW of clean energy projects, including fixed-bottom and floating offshore wind.

The incentives will support new renewable energy projects that use less mature technologies, such as “offshore wind power (floating or fixed), thermodynamic solar, floating solar, tidal, wave and other marine energy as well as on biogas and biomass,” the European Commission (EC) said in a statement.

The Italian government will select the projects through a competitive bidding process and the facilities are expected to come on stream by the end of 2028.

Without financial support, these projects are unlikely to be built, the EC said.

The support will be provided through a contract for difference (CfD) for each kWh of electricity injected into the grid and will last for as long as the plants produce power. Under the scheme, project developers will gain a guaranteed level of long-term income.

The incentives will be financed through a levy that will be added to electricity bills, the commission said.

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