When Ørsted announced $4 billion in write-downs and cancelled its flagship New Jersey wind projects, it exposed the fundamental economics of offshore wind: projects that only work with massive public subsidies, and developers who walk away when the subsidies aren’t enough. An OSINT investigation into the money trail.
Image directive: Source a public domain image of offshore wind turbines from the Department of Energy’s image gallery or BOEM public records. Alternatively, create a bar chart showing Ørsted’s impairment losses: Ocean Wind 1 (DKK 19.9B), Ocean Wind 2, SouthCoast Wind ($60M penalty), and BP’s wind write-down ($540M).
The October Surprise
On October 31, 2023 — Halloween, appropriately enough — Danish energy giant Ørsted dropped a bombshell that sent shockwaves through the global renewable energy industry. The company announced it was cancelling its Ocean Wind 1 and Ocean Wind 2 projects off the coast of New Jersey, recording impairment losses of DKK 28.4 billion — approximately $4 billion. Ocean Wind 1 alone accounted for DKK 19.9 billion in write-downs. Additional cancellation provisions of DKK 8 to 11 billion covered potential fees owed to contractors, suppliers, and state authorities.
The combined capacity of the cancelled projects: 2,400 megawatts of offshore wind generation that New Jersey had been counting on to meet its renewable energy targets. Gone in a single earnings announcement.
The Massachusetts Retreat
Ørsted wasn’t done. The company also terminated its existing Power Purchase Agreements for the SouthCoast Wind project off Massachusetts, paying a $60 million penalty to walk away from a 1,200-megawatt commitment. CEO Francis Slingsby cited “material and unforeseen supply chain and financing cost increases” — corporate language for “the numbers never worked.”
Ørsted wasn’t alone in its retreat. BP wrote down $540 million in Q3 2023 on its own wind projects following New York’s rejection of offshore wind price renegotiation requests. Across the industry, developers who had aggressively bid for offshore wind contracts during a period of low interest rates and optimistic cost projections were now facing the reality of higher borrowing costs, supply chain disruptions, and construction expenses that had ballooned far beyond original estimates.
The Subsidy Architecture
The Inflation Reduction Act — signed in August 2022 — created a massive subsidy framework for offshore wind. Investment Tax Credits of up to 30% of project costs for developers meeting prevailing wage and apprenticeship requirements. Extended Production Tax Credits for electricity generated. Manufacturing tax credits for domestic production of offshore wind components. The Treasury Department issued implementation guidance in November 2023, clarifying how developers could claim these benefits.
But even this unprecedented level of public support wasn’t enough. The subsidies were designed around cost assumptions that proved wildly optimistic. When interest rates rose, steel prices increased, and specialized installation vessels remained scarce, the gap between project costs and subsidy levels widened until the projects became financially unviable — even with billions in taxpayer support.
The Quiet Demand for More
Rather than absorbing the losses and moving on, developers began a coordinated campaign for even larger subsidies. Earnings calls and investor presentations from late 2023 featured consistent messaging: offshore wind was essential for climate goals, costs were “temporary” headwinds, and government support needed to be “enhanced” to maintain project viability.
Translation: the developers wanted taxpayers to cover the cost overruns that their own bidding errors had created. The contracts these companies signed — at prices they proposed — were now deemed insufficient, and the solution was more public money.
BOEM, the Bureau of Ocean Energy Management, continued to advance new lease sales throughout 2023, required by the Inflation Reduction Act to hold Gulf of Mexico sales by specific deadlines. The federal government was simultaneously subsidizing an industry that was collapsing under the weight of its own cost projections and creating new commitments that faced the same economic headwinds.
The Accountability Gap
The offshore wind debacle exposes a fundamental problem with the current approach to energy transition: when private developers bid aggressively for public contracts, collect subsidies during the development phase, and then walk away when construction costs exceed their projections, taxpayers bear the risk while developers preserve their capital.
Ørsted’s stock price dropped precipitously after the announcement, but the company survived. New Jersey’s renewable energy timeline did not. The state had built its climate plan around offshore wind capacity that will now take years to replace — if it can be replaced at all.
The lesson is not that offshore wind is impossible. The lesson is that an energy policy built on optimistic cost assumptions and taxpayer-funded risk absorption is a recipe for exactly the kind of expensive failure that October 31 delivered.
Eduardo Bacci is an investigative journalist at The Investigative Journal. Data sources include Ørsted corporate filings, BOEM lease sale records, Treasury Department IRA guidance, and energy industry earnings transcripts.