On a napkin
The short version
Offshore wind offers something onshore wind can't: strong, consistent winds near the high-value load centers of the US Northeast and Mid-Atlantic coast, with capacity factors of 40–60% and no transmission constraints from remote generation sites. These advantages are real. So are the costs — offshore wind is 3–4x more expensive to install per kW than onshore wind, requiring large-scale turbines, specialized installation vessels, and expensive subsea cables.
The US offshore wind industry arrived at a reckoning in 2022–2024 as projects signed under pre-inflation fixed-price PPAs faced cost structures that made construction economically impossible. Major developers canceled or renegotiated contracts across the Northeast, writing off billions in development costs. The fundamental economics of offshore wind remain viable — but at higher prices than the industry initially promised.
The Jones Act constraint: US law requires that vessels transporting cargo between US ports be US-built, US-owned, and US-crewed. There are currently no Jones Act-compliant wind turbine installation vessels (WTIVs). Until they are built — the first is expected around 2026–2027 — US offshore wind projects must use foreign WTIVs that stop at Canadian or other foreign ports to comply, adding cost and schedule risk.
Why offshore wind costs spiked
Projects signed PPAs at $80–$100/MWh in 2019–2021, before costs escalated sharply. Supply chain inflation drove up turbine, monopile, and cable costs 30–50%. Rising interest rates increased the cost of project financing. Labor shortages and port infrastructure limitations added schedule delays. The combination made previously bankable projects uneconomical — forcing cancellations of major projects including Avangrid's Park City Wind and Orsted's Ocean Wind 1 and 2.
The long-term case remains intact
Despite near-term headwinds — including the OBBBA's accelerated termination of wind tax credits for facilities placed in service after December 31, 2027 (with a 12-month BOC safe harbor before July 4, 2026) — the structural case for offshore wind remains substantial. The Northeast US has outstanding wind resources, 100 GW of state procurement targets through 2035, and a long coastline with shallow water suitable for fixed-bottom turbines. The industry is repricing — new contracts are clearing at $120–$160/MWh — and as the domestic supply chain develops, costs are expected to fall through the 2030s. State-level offtake commitments and renewable portfolio standards will continue driving demand even as federal tax incentives wind down.
Common questions
Related reading on The Outlet
Need help navigating this topic?
Pilot Energy’s advocacy team can help you make sense of the energy landscape and build a strategy that works for your organization.
Talk to an Advisor