Winds Dying Down for the 'Wind' Industry

Joan Sammon11 Nov, 2023 4 Min Read
Tried and found wanting.

With the recent announcement of multiple wind projects being canceled and the broader downturn of renewable energy exchange traded funds (ETFs) during the last half of this year, the strength of the Biden administration’s green energy transition initiative may be weakening. The markets -- broadly understood to reflect the sentiment of investors -- seems to be suggesting what many have understood since President Biden took office: that the green transition, often touted by wealthy globalists as some kind of social saving grace, lacks sufficient market relevance and acceptance to exist outside of the construct of subsidies, tax credits, and mandates imagined and promoted by globalist central planners dedicated to societal control and surveillance schemes.

In October, New York authorities denied requests from the world’s top offshore wind farm developer, Ørsted, and industry counterparts BP and Equinor to renegotiate their contracts for four offshore wind projects and 86 land-based projects. Ørsted, a Danish multinational is purportedly scrapping its Ocean Wind I & II projects, located off southern New Jersey due to what it described as problems with supply chains, higher interest rates and a failure to obtain additional tax credits above the 30 percent the company already had secured. The two projects were supposed to deliver over 2.2 gigawatts of power.

Meanwhile, the canceled New England contracts, representing three more projects, would have provided another 3.2 gigawatts of wind-generated power to Massachusetts and Connecticut. Those developers likewise said their projects were no longer financially feasible.

Not the way forward, apparently.

The combined 5.4 gigawatts generation capacity just canceled, represents 31 percent of the 17.4 gigawatt target envisioned by the administration, according to data from ClearView Energy Partners and the Energy Department. Between the cancellations from last month and others previously announced, more than half of the 17.4 gigawatt target has been canceled or are at risk of being canceled.

Representative of a trend that has been percolating in the stock market since earlier this year, these cancellations have worsened the outlook further. The S&P Global Clean Energy Index, comprised of the 100 biggest companies in the renewable energy sector had, as of last month, an abysmal year-to-date return of -31.08 percent. Similarly, the iShares Global Clean Energy ETF had a -29.78 percent YTD return.

Ørsted sounded the alarm in early August when it warned shareholders and the broader market of up to $2.3 billion of impairments on its U.S. project portfolio. Ørsted share price has dropped 56.89 percent this year, with most of the decline accumulated since August as the viability of Ocean Wind I & II began to fade. Similarly, the U.S., NextEra Energy Partners LP, the renewable energy company of NextEra Energy, had its shares decrease by 70.93 percent so far this year.

While supply chains and economic conditions have undoubtedly tightened since these projects were first envisioned by energy developers and by the Biden Administration, the push toward a green energy transition has never been an initiative seeking improved economics for consumers. Rather, improved economics were only going to be realized by those promoting the "climate change" narrative and advocating for the lucrative projects that flow from it. Those who believed they would financially benefit from the administration‘s green energy projects in the U.S. and those across Europe are the same entities that have unceasingly beaten the world about the head with a false choice—wind- and solar-powered electrification or societal destruction.

But most Americans know better. It was only three years ago after all when this green transition was fully thrust upon us  during the throes of a dubiously originated virus. America at that time was the producer of abundant and inexpensive fossil-fuel products when Biden took office. So efficient at producing inexpensive energy was the U.S. back then that America was a net exporter of oil and gas to markets around the world. Since then, the administration has sought to dismantle that economic advantage.

When fantasy and alarmism supplant reality.

The government has sought to weaken the fossil-fuel industry through policy pronouncements, taxpayer-financed subsidies of otherwise unsustainable companies, and agency edicts. Cabinet members from every corner of the  administration from the Department of Energy to the Department of Defense have touted the "green energy: transition as they announced every kind of regulation to expedite the policy initiative. Seeking to avoid legislative tussling in the halls of Congress where such edicts would be met with scrutiny and likely defeat, these edicts have now resulted in sky-rocketing energy prices, higher prices on everything across the economy, diminished consumer choice, and an increasingly stressed electric grid that cannot sustain the additional demand needed for the wishful "green" transition.

Far from free markets, ukases regarding which kind of light bulbs one can manufacture or purchase, to which appliances  one can own, to which cars one will be able to drive, these repressive efforts serve to diminish the power of the individual consumer and to amplify the detrimental impact of government upon the lives of formerly successful citizens. The push for the green transition assumes that Americans are willing  and eager to live in a less convenient, less affordable, less free country. It moves the U.S. away from domestically-produced inexpensive and abundant energy, underpinned by strong environmental standards, to dependence on China—America’s most strident enemy and one of the globe’s most environmentally destructive powers.

Callous investors understand that China’s batteries and solar panels and the mining of the rare earth minerals needed in their manufacture are often brought to market thanks to slaves and child laborers, using a supply chain underpinned by extreme environmental destruction, thus putting the U.S. on a collision course with reality. Thus the administration necessarily must ignore China’s increasingly aggressive stance in the Indo-Pacific region, its Belt and Road initiative that now reaches into Central and South America, and its efforts to infiltrate the U.S. via the open southern border. While the fight to combat "green" propaganda still lies in front of American consumers and investors, it is clear that there are now mighty head winds brewing for wind energy industry. 

Combine this with the growing consumer resistance against electric cars, and you have the makings of a second American revolution. 

Joan Sammon is the founder of a boutique oil and gas advisory firm that develops strategies for an array of business & market challenges. As an ESG expert she explains the threat of ESG to her corporate clients.

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