(Oil Price) – President Donald Trump’s crackdown on offshore wind power in the United States could spill over globally, dampening investor sentiment in the industry, wind power executives have warned.
Citing the chief executive of Vestas, the turbine maker, the Financial Times reported today that the ban on offshore wind in the United States heightened uncertainty, which would reduce investors’ risk tolerance and result in a higher cost of capital for an industry already struggling with rising costs.
President Trump has made no secret of his strongly negative attitude to wind power. Over the first eight months after he took office, some $19 billion in wind and solar power projects was canceled, and investment announcements in the two industries declined by 20%.
The administration suspended several large-scale offshore wind projects that were already under construction, to which one developer responded with a lawsuit. Danish Ørsted and tis joint venture partner in the Revolution Wind project, a subsidiary of Global Infrastructure Partners, filed a suit against the U.S. federal government earlier this month.
Norway’s oil major Equinor was also hit with a stop-work order on its Empire Wind project, worth $3 billion. The U.S. federal government cited national security concerns as the basis for the orders that affected five such projects. The Empire Wind 1 installation was 60% complete at the time of the suspension, which prompted Equinor to threaten to sue. To date, however, the company has not made any steps in that direction, instead saying earlier this month it would have to cancel the project unless the federal government lifts the stop-work order. This probably won’t help investor sentiment in the wind space.
“When you have a 20 to 30-year investment programme, the only way you can cover yourself for risk is to ask for a higher return,” Vestas’ Henrik Andersen told the Financial Times. “When you get impairments in an industry, everyone would start saying, ‘could that hit us as well?’”
By Irina Slav for Oilprice.com
