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Has Offshore Wind Finally Hit Rock Bottom?

Inside episode two of Shift Key.

Wind turbines.
Heatmap Illustration/Getty Images

It has been a catastrophic 12 months for offshore wind in the United States. Several large projects have been canceled along the Mid-Atlantic, and Orsted, the world’s largest offshore wind developer, has laid off hundreds of employees and canceled its dividend. Is the industry dying?

Maybe it’s actually about to turn a corner. In this episode, Jesse Jenkins, an energy systems expert and professor at Princeton University, and I discuss the future of the sector, and Jesse tries to convince me that the industry is about to bounce back.

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Here's an excerpt of our conversation:

Robinson Meyer: Make a case to me about why offshore wind … like 2023 was the catastrophic year for offshore wind, and now it’s going to come back.

Jesse Jenkins:
Yeah, that’s a great question.

I mean, I think it is worth pausing and noting that offshore wind in the United States was already pretty expensive, and is now even more expensive. So I think the contracts that New Jersey signed, for example, which are 20-year, basically fixed price contracts — they got to go up at 2% per year, which is what we thought inflation would be, but now is maybe not where it will be over the next few years, but basically fixed long term contracts — were in the $80 to $90 per megawatt-hour range, which itself is roughly double the wholesale electricity cost in the region. So we’re basically paying for twice as much for wind energy as we would pay for natural gas or coal fired power in the regional electricity mix. And that’s after a federal subsidy knocks off 30% of the upfront cost.

That sounds like a lot, right? And I think it’s fair to say that the costs that are going to be signed in the new auctions that are happening now are going to be up or above $100 per megawatt hour. So, just the interest rates alone ... You know, the Fed raised interest rates by over 5% from March 2022 to August 2023. That 5 percentage point increase in the cost of capital would raise the levelized cost, or average cost of electricity alone, by about a third for any of these projects. So it’s a huge cost escalator. And of course, the underlying cost of building the projects went up by about 65%. That’s way faster, about three times faster than consumer goods went up. We all know about how much more expensive it is to buy milk or bread or fill up at the gas pump. So, that’s the case for seeing this as, you know, the bear case — that these projects are now really expensive, and maybe they’re more expensive than we’re willing to pay.

On the other hand, I think there’s three reasons that, basically every state is still committed to building out offshore wind despite those cost increases. One is that is an historic, once in a generation macro inflationary cycle, a global pandemic with all of the supply chain disruptions that came with that, followed by a war in Europe and all of the impacts on energy costs that that brought about, you know, etc., these are really unique circumstances. And so those should be behind us, right?

Hopefully we can then get back on a trajectory of building out this new industry across the region, including the supply chains and the expertise in the transmission infrastructure undersea, to bring the wind onshore. That will steadily drive down the cost. And the reason to be optimistic about that is we have seen that in Europe, right? The wind industry did follow a very significant cost decline trajectory over the 15 years or so from its birth to now, in Europe. And we’re just going to have to pay a lot of those costs here because that learning and the experience in the infrastructure and the workforce isn’t really translatable.

The second reason is just there’s not a lot of alternatives for these states. Yes, electricity is structurally more expensive in Europe. It’s also structurally more expensive all along the eastern coast because we have high population density, population centers. There’s … these are very dense populated centers close to the coast, without access to the really good wind and solar resources that we see in the U.S. interior or the West. And so what are we going to do? Are we going to continue to burn fossil fuels? That would be the cheapest thing to do in the near term, but of course has lots of long term implications, including accelerating climate change. And all of these states have committed to transitioning away from fossil fuels. Virginia, New Jersey, York, Massachusetts, etc. have these 100% clean energy commitments.

The full transcript is available here.

This episode of Shift Key is sponsored by Advanced Energy United, KORE Power, and Yale …

Advanced Energy United educates, engages, and advocates for policies that allow our member companies to compete to power our economy with 100% clean energy, working with decision makers and energy market regulators to achieve this goal. Together, we are united in our mission to accelerate the transition to 100% clean energy in America. Learn more at

KORE Power provides the commercial, industrial, and utility markets with functional solutions that advance the clean energy transition worldwide. KORE Power's technology and manufacturing capabilities provide direct access to next generation battery cells, energy storage systems that scale to grid+, EV power & infrastructure, and intuitive asset management to unlock energy strategies across a myriad of applications. Explore more at — the future of clean energy is here.

Build your skills in policy, finance, and clean technology at Yale. Yale’s Financing and Deploying Clean Energy certificate program is a 10-month online certificate program that trains and connects clean energy professionals to catalyze an equitable transition to a clean economy. Connect with Yale’s expertise, grow your professional network, and deepen your impact. Learn more at

Music for Shift Key is by Adam Kromelow.

Robinson Meyer

Robinson is the founding executive editor of Heatmap. He was previously a staff writer at The Atlantic, where he covered climate change, energy, and technology. Read More

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