Reuters reports that two offshore wind projects, Bluepoint Wind and Golden State Wind, will end their offshore wind leases in exchange for reimbursements of $885 million; the money will be invested by them in oil and gas instead. The projects, one in the Atlantic and one in the Pacific, are managed by Ocean Winds, a joint venture between France’s ENGIE and Portugal’s EDP Renewables. Bluepoint Wind is an offshore wind project off the coasts of New Jersey and New York, and Golden State Wind is a floating offshore wind project proposed off California’s central coast. Both companies will not pursue any new offshore wind projects in the United States, according to the Interior Department. Offshore wind is a very expensive technology in its own right and, as with onshore wind, it needs back-up power when the wind does not blow, requiring additional systems costs.
Ocean Winds partnered with a unit of asset manager BlackRock on Bluepoint Wind, and with Reventus Power, a London-based offshore wind investment firm, in the Golden State Wind project off California. Global Infrastructure Partners, the BlackRock unit, agreed to invest $765 million, the bid amount for Bluepoint Wind, in a U.S. liquefied natural gas (LNG) facility. In addition, Golden State Wind will be able to recover $120 million in lease fees after it invests a similar amount in oil and gas, energy infrastructure, or LNG projects.
This buyout comes after the Interior Department bought out the offshore wind leases from French energy company TotalEnergies, which is receiving nearly a $1 billion refund for its leases off the coasts of North Carolina and New York. According to Reuters, it paid $795 million for the New York lease at an auction during the Biden administration. TotalEnergies will invest the money in U.S. oil and gas projects, investing $928 million in 2026 in the development of four trains at the Rio Grande LNG plant in Texas, and in the development of upstream conventional oil in the U.S. Gulf and shale gas production. The United States will terminate Total’s leases in the Carolina Long Bay area and the New York Bight area, both executed in 2022. TotalEnergies has pledged not to develop any new offshore wind projects in the United States.
According to Interior Secretary Doug Burgum, “The companies that bid for these offshore wind leases were basically sold a product in 2022 that was only viable when propped up by massive taxpayer subsidies. Now that hardworking Americans are no longer footing the bill for expensive, unreliable, intermittent energy projects, companies are once again investing in affordable, reliable, secure energy infrastructure.”
The Associated Press reports that a number of states and the District of Columbia had challenged in court an executive order from President Trump blocking wind energy projects. In December, a federal judge vacated President Trump’s executive order, finding it unlawful, resulting in the administration taking other actions to end offshore wind projects. Democrats in Congress are now investigating the Trump administration’s move to buy out offshore wind leases and use the investment funds for oil and gas projects in the United States. U.S. Representatives Jared Huffman of California, the top Democrat on the House Natural Resources Committee, and Jamie Raskin, the ranking Democrat on the House Judiciary Committee, are demanding information about the TotalEnergies agreement with the administration.
2025 Bill Phases Out Tax Credits for Wind and Solar
The One Big Beautiful Bill Act phases out clean electricity investment and production tax credits for wind and solar after decades of subsidies. Originally intended for nascent industries, the investment credit was significantly enhanced in 2005, having been initially introduced in 1978 and having been extended 15 times. The production credit has been in place since 1992 and has been extended more than a dozen times. Biden’s Inflation Reduction Act essentially made these credits unlimited since the requirement for sunsetting them was based on heavy reductions of carbon dioxide emissions in the generation sector, which may have never been met. The One Big Beautiful Bill Act significantly shortened the timeline for developers to receive the wind and solar tax credits. In order to qualify for the tax credits, developers must start construction by July 2026 and reach commercial operation by the end of 2028.
Analysis
Offshore wind is very expensive and requires backup power when there is insufficient wind to generate electricity. As we’ve explained previously, “Offshore wind energy is one of the most expensive technologies currently being built to generate electricity. According to the Energy Information Administration, offshore wind is almost three times as expensive as onshore wind and solar PV. Clearly, it is not a good value for consumers.” With the One Big Beautiful Bill Act phasing out tax credits for wind and solar projects, the economics of offshore wind are no longer as viable as they were when the leases were purchased.
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