The Trump administration's recent move to halt a wind project under construction has put the industry in a state of emergency. By Avi Salzman

The offshore wind industry was struggling even before Donald Trump took office. But his administration's move last week to halt a wind project under construction has put the industry in a state of emergency.

Billions of dollars worth of investment in at least half a dozen other projects up the East Coast are at risk. The projects are owned by companies ranging from Virginia utility Dominion Energy, to financial giants Apollo Global Management and BlackRock, to large European energy companies from Denmark's Orsted to Norway's Equinor. Industrial companies like GE Vernova and Vestas Wind Systems supply the industry. The ramifications could spread to seemingly unrelated industries, like shipbuilding.

For investors, offshore wind remains a risky investment that's "in the bull's-eye" of the Trump administration, says Shawn Kravetz, president of Esplanade Capital, which invests in renewable energy. It should eventually bounce back, but the short and medium term looks problematic.

"Often, when a sector truly seems 'uninvestible,' that is a promising contrarian moment to take a serious look," Kravetz wrote in an email. "Unfortunately for offshore wind, this is likely one of those moments when it both feels and is uninvestible."

Secretary of the Interior Doug Burgum issued an order last week for New York's Empire Wind project to stop construction, saying that there were deficiencies in the project's permitting process. The department didn't respond to a request for information on those deficiencies. Offshore wind opponents say the Biden administration rushed approvals through, giving too little attention to the potential environmental harms of offshore wind. While the rigor of the project's review may be up for debate, it was longer than most similar reviews. The project went through a 46-month approval process, the second-longest of any offshore-wind project, according to Bloomberg NEF.

What made Burgum's order particularly surprising was that Empire Wind had been fully permitted and project owner Equinor had begun construction. More than 1,500 people had worked to build a staging port in Brooklyn, N.Y., and others had been laying crushed rock underwater at the sites of the turbines it planned to install. Officials from New York state and Equinor both said they are evaluating their legal options in regard to the stop work order.

Burgum said that his department will undertake reviews of all projects, including those already under construction. In a statement to coincide with Earth Day on Tuesday, Trump said that he was stopping some wind projects because they have a "detrimental environmental impact, particularly on wildlife, which often outweighs their benefits." New York had been counting on the project to help it decarbonize its power system.

Any more setbacks for the offshore wind industry could have ripple effects. The American Clean Power Association, an industry group, said that offshore wind supports 25,000 jobs, and companies have invested $15 billion in projects to build out or support the industry. Blocking the industry goes against Trump's stated intentions to boost America's energy resources, said Jason Grumet, CEO of the association. But Trump appears to dislike the industry in part because the biggest players are European. In an executive order relaxing fishing regulations, he wrote that fishing grounds had been taken over by "foreign offshore wind companies."

The American offshore wind industry is ramping up, and proponents had hoped it was about to become a full-fledged success story. Offshore wind is a much bigger industry overseas. It started in Europe decades ago, and China has been ramping up for years. In the U.S. there's only one active large-scale project today -- South Fork Wind's 12 turbines provide power to New York. But the Biden administration approved 10 other projects with the capacity to power millions of homes.

Some of those projects are stalled because of rising supply-chain costs or regulatory uncertainty. Danish wind developer Orsted stopped developing two New Jersey projects last year because of rising costs. Shell has pulled out of two projects on the East Coast too.

At least three projects are under construction. The biggest of those is in Virginia, where Dominion Energy says it is more than halfway through construction on what could be the country's largest offshore wind project. It's set to have 176 turbines generating 2.6 gigawatts worth of power, or enough for 660,000 homes. The company has installed 78 monopile foundations, which are the bases of the turbines. The project is on schedule and should be producing power by the end of next year, Dominion says.

That project faces mounting legal and political risks, however. Opponents are hoping the Trump administration steps in to shut it down as it did with Empire Wind. The conservative think tank Heartland Institute and other groups filed lawsuits against Dominion and the federal government last year, saying that environmental reviews hadn't been adequate.

The federal government is technically on Dominion's side. But it's unclear whether the Trump administration will continue to fight for the project. The government's next deadline for legal filings is Wednesday. The White House didn't respond to a request for comment on where it stands.

If the project is stopped, it would be a major blow to Dominion. The project's estimated construction costs are $10.7 billion. But the impact would be even wider. European company Siemens Gamesa is making the turbines, for instance. And Dominion paid for a massive ship, called the Charybdis after a sea monster from Greek mythology, to install the turbines. The Charybdis is 472 feet long and is the first large-scale U.S.-made vessel designed to install turbines. It cost $715 million to build at a shipyard in Brownsville, Texas.

The fact that it's American-built is important, and not just to fulfill Trump's Made in the USA ambitions. A law called the Jones Act forces companies to use domestic ships when they transport goods from one U.S. port to another. To comply with the law, offshore wind projects have been transporting turbines from Canadian docks, imposing extra costs and delays.

The Empire Wind project also signed a contract with a U.S. shipbuilder for a smaller vessel for its project, and it isn't clear what happens to that contract if the project is halted indefinitely. The Louisiana shipbuilder Edison Chouest didn't respond to a request for comment.

At least two other projects have started construction. One is Revolution Wind, which will supply power to Rhode Island and Connecticut. It's owned by Orsted and a unit of BlackRock. Orsted didn't respond to a request for comment and BlackRock declined to comment. Eversource Energy, a utility that sold its stake in the project to the BlackRock unit, could be on the hook for costs if the project doesn't go through, according to Jefferies analyst Paul Zimbardo.

Another project known as Vineyard Wind, which will supply power to Massachusetts, is also under construction after some mishaps -- including a blade falling off a GE Vernova turbine. It's owned by private investment firm Copenhagen Infrastructure Partners and a unit of Spanish power company Iberdrola.

The offshore wind industry was on the brink of its largest successes to date. Now, it looks like its emergence will take years longer than expected.

Write to Avi Salzman at avi.salzman@barrons.com

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April 25, 2025 21:30 ET (01:30 GMT)

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