The U.S. administration of Donald Trump has put the brakes on offshore wind projects that had been pushed since the tenure of former President Joe Biden, dealing Korea a "stray bullet." With U.S. projects halted, global offshore wind developers are expected to face financial trouble or scale back investment. The government's plan to activate the market with their participation is now likely to be disrupted.
According to the renewable energy industry on the 29th, the Trump administration announced on the 23rd (local time) that it would immediately suspend leasing of waters where offshore wind farms are under construction, citing national security. To build offshore wind, generators must be installed in U.S. federal waters. If the federal government halts sea-area leasing, installation itself becomes impossible, let alone operating the facilities.
U.S. Interior Secretary Doug Burgum said the department would suspend leasing for offshore wind farms, citing a recently released report by the Ministry of National Defense and noting that "the rotating blades of offshore wind turbines can interfere with military radar."
A total of five offshore wind projects now face unavoidable construction stoppages under the measure. They include Coastal Virginia, the largest offshore wind project in the United States; Empire Wind 1 and Sunrise Wind off New York; and Revolution Wind and Vineyard Wind 1, which were slated to supply power to Rhode Island and Connecticut.
According to the Offshore Wind industry group Oceantic Network, if the five offshore wind facilities were completed and run at maximum capacity, they were expected to produce about 6 gigawatts (GW) of power.
As concerns grew that construction halts would hit growth prospects and financial soundness, offshore wind developers' shares fell across the board.
Shares of Ørsted, the world's largest wind developer from Denmark, fell more than 11% immediately after the Trump administration's announcement. Ørsted is the developer of the Revolution Wind and Sunrise Wind projects. Dominion Energy, the developer of Coastal Virginia, fell 3.7% the same day. Equinor, the Norwegian energy corporations developing Empire Wind 1, slipped 1%.
Korea's plan to expand offshore wind after President Lee Jae-myung took office also flashed a red light. If global offshore wind developers fail in the U.S. market and run into financial trouble, projects underway in Korea will inevitably be affected. Because offshore wind requires hefty development sums, global corporations such as Ørsted and Equinor often step in as developers across multiple countries.
Ørsted and Equinor are currently pursuing offshore wind projects in Korea. Ørsted's Incheon Offshore Wind project off Incheon is slated to begin operations in early 2030. Equinor is handling two projects off Ulsan: Firefly and Donghae 1.
A senior official at an offshore wind company said, "If projects run aground in the United States, offshore wind developers cannot avoid a hit to their financial soundness," adding, "In Europe, the world's largest market, development costs have risen in recent years, leading more companies to abandon awarded projects or skip bidding."
In fact, not a single company participated in the 2023 offshore wind tender in the United Kingdom. Labor costs surged after the coronavirus pandemic, and the Russia-Ukraine war sharply pushed up raw material prices, increasing the expense burden. Tenders held this year in Denmark and Germany likewise drew no bidders.
"As Europe's offshore wind market entered a stagnation phase, many developers turned their attention to the United States, but the launch of the Trump administration has blocked even that," the official said. "The Korean market is indeed an opportunity, but global developers, facing red alerts over financial soundness, are hesitating to proceed."