Tag Archives: supply chain

It’s Been A Brutal Year For Offshore Wind — Despite Analysts’ Best Guesses

From The Daily Caller

NICK POPE

CONTRIBUTOR

Some analysts predicted that the U.S. offshore wind industry would bounce back after a rough 2023, but many of the same problems that plagued the industry last year have continued to burden developers through the beginning of 2024.

Energy data analytics provider Wood Mackenzie, consultants from Deloitte, Reuters and environmental lawyers for a law firm called Locke Lord variously projected that the U.S. offshore wind sector would rebound after a distressing 2023. However, four months in to 2024, the inflation, higher borrowing costs, logistical problems and supply chain woes that battered the industry in 2023 have not relented, forcing developers to cancel or seek to renegotiate deals as they did in 2023.

“Obviously, providing affordable and reliable energy for everyone is a challenging endeavor,” Kevin Dayaratna, a senior research fellow for the Heritage Foundation, told the Daily Caller News Foundation. “Even despite all of the subsidies these alternative forms of energy – such as offshore wind – have received, they have still failed to become a significantly mainstream source of energy.” (RELATED: Blue State Doubles Down On Offshore Wind After 2023’s Massive Failure)

Since the start of 2023, approximately 60% of all contracts signed by American offshore wind developers have been cancelled, according to E&E News. Ørsted, a Danish company and one of the world’s leading offshore wind developers, backed out of two major planned projects in New Jersey in 2023, while other players like General Electric, British Petroleum (BP) and Equinor attempted to renegotiate with state governments as economic headwinds eroded projects’ profitability.

Similar developments have played out to start 2024, with developers up and down the east coast backing out of deals to sell power from their projects as the same fundamental economic problems persist despite the projections of some market experts and media outlets.

“Vessel owners and operators are actively contracting with original equipment manufacturers and project developers to reserve vessels for project construction in 2024 and beyond,” Locke Lord attorneys M. Benjamin Cowan and Emily Huggins Jones wrote on January 3. “Thus, despite significant headwinds in 2023, with improving economics, more flexible procurement procedures, continued federal support, and increasing legislative support, the U.S. offshore market appears to have weathered the worst of the storm and is poised for growth in the coming year.”

On the same day that the two attorneys published their market analysis, Equinor and BP backed out of a contract with New York state to provide power generated by their planned Empire Wind 2 offshore wind farm due to inflationary pressures. Subsequently, three other New York offshore wind projects were cancelled on April 19.

“The offshore wind sector, which faced setbacks in 2023, is expected to rebound in 2024 with tangible opportunities and a record number of tenders,” Wood Mackenzie wrote on January 25. “In summary, 2024 holds the promise of a global wind energy resurgence, with key areas of focus including market recovery, reliability, profitability for [original equipment manufacturers] and the offshore wind sector’s evolving dynamics.”

The day after Wood Mackenzie published those words, Ørsted announced that it had backed out of Maryland’s orders approving its Skipjack 1 and 2 projects off the state’s coast. The company said at the time that inflation, high refinancing costs and supply chain issues combined to render the state’s subsidies economically unviable, but that it would not give up on the projects altogether. (RELATED: Environmental Laws That Impeded Pipelines For Years Could Trip Up Biden’s Sprint Toward Offshore Wind)

Several senior employees of Deloitte, one of the country’s top consulting firms, also projected confidence that the offshore wind industry would be able to turn things around in 2024.

“Offshore wind investments dropped in 2023 amid challenges with costs and permitting, but the tide is expected to turn in 2024 as construction and operations get underway at several key projects,” reads a February 9 piece by Deloitte consultants Marlene Motyka, Jim Thomson, Kate Hardin and Carolyn Amon published in The Wall Street Journal’s “sustainable business” section. “Transmission is a factor in many constraints on renewable deployments, although [Infrastructure Investment and Jobs Act] and [Inflation Reduction Act] programs and grants could start tackling transmission issues in 2024.”

Reuters, a global news outlet, echoed some of this optimism in its own projection that the American offshore wind industry would rally after 2023’s turbulence.

“The U.S. offshore wind industry is eying a brighter 2024, with work expected to start on several projects following a year marked by stalled developments and billions of dollars in write-offs,” reads a Reuters piece published in December 2023 under the headline “U.S. offshore wind poised for success next year after turbulent 2023.”

The industry’s problems are also complicating President Joe Biden’s climate agenda. The Biden administration has set a goal of having offshore wind providing enough electricity to power 10 million American homes by 2030, but Reuters reported in November 2023 that the target is almost certainly out of reach due to the industry’s struggles.

The industry has struggled despite the availability of robust federal subsidies, including tax credits contained in the Inflation Reduction Act, Biden’s signature climate bill. Despite the industry’s missteps, the administration is pushing ahead with its offshore wind agenda, releasing a robust five-year leasing schedule for the industry on Wednesday that could see up to a dozen lease sales through 2028.

“Biden’s offshore wind fetish ignores the realities affecting the industry here and abroad, but that is the hallmark of all his energy and climate schemes,” Dan Kish, a senior research fellow at the Institute for Energy Research, told the DCNF. “Warren Buffett once said the only reason to build wind turbines is the tax credits, and he was talking about onshore wind. Offshore wind is three times as expensive, and it only makes sense with sweetheart electric rates for the builders gifted to them by politicians looking for golden parachute jobs with wind companies after consumers boot them out of office when they start getting their bills.”

Wood Mackenzie, Reuters, Deloitte, Locke Lord and the White House did not respond to requests for comment.

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The EV market hits the brakes as sales hit a speed bump!

From Watts Up With That?

The profiles of common folks for potential EV ownership are vastly different from those of current elite EV owners.

Summary: We’re running out of elites in the wealthy countries that are buying EV’s.

Published February 26, 2024 at America Out Loud NEWS

The EV market hits the brakes as sales hit a speed bump!

Ronald Stein  is an engineer, Founder of PTS Advance, Author, Columnist, Energy Literacy Consultant, and Featured columnist on Energy Literacy atAmerica Out Loud NEWS.  Ron is also Senior Policy Advisor for the Heartland Institute, the Center for a Constructive Tomorrow, and co-author of the Pulitzer Prize nominated book “Clean Energy Exploitations”.

The elites have bought EV’s, and elites may continue to buy EV’s, BUT we’re quickly running out of elites!

The average debt in America is almost $60,000 across credit cards, mortgages, auto loans, and student loans. The common folks need a workhorse vehicle, not just a second car toy that sits in the garage to be used on short ventures!

Inflation has changed the way many Americans shop. Fed up with prices that remain about 19 percent on average, above where they were before the pandemic, consumers are fighting back. More Americans are buying used cars, but there has yet to be a used EV market!

Mandating a change to EV ownership and further financial austerity onto those that can least afford it, is facing a rebellion from those that need transportation. The problem is that manufacturers are loading up the “supply chain” with EV’s on dealer lots, but they’re not seeing the “demand” for EV’s coming from the public.

The current EV ownership profiles are reflected in the oligarchic elite owners are that they are:

  • Highly educated.
  • Highly compensated.
  • Multi-car families.
  • Low mileage requirements for the families’ second car, i.e., the EV.
  • Reside in a “temperate” climate like CA or FL. Almost 40% of EV’s are in CA and CA has 6 times as many EV’s as FL.

Unlike the profile of current EV owners, the owners of internal combustion engine vehicles are dramatically different from most potential EV vehicle owners.

  • Many are single-car owners,
  • Most of the potential car buyers are not as highly educated.
  • Nor as highly compensated as the elite EV owners.
  • Mandating a change to EV ownership and forced austerity, may face a rebellion from those that need affordable vehicle transportation.

EV sales are beginning to hit a speed bump.

  • Hertz, previously an eager early adopter of fleet electrification, announced a big sell-off of EVs.
  • Ford’s electric-vehicle business lost nearly $4.7 billion in 2023 and could lose another $5 billion in 2024, thus, Ford slashed EV production, having earlier pulled back on planned battery factories.
  • Unsold new EVs are piling up on dealer lots, spurring aggressive discounting.
  • “No one wants to buy used EVs”, as Fortune reports, leaving EV used-car values in free fall.

 According to one industry executive, the situation “has the potential to destroy billions” of dollars in value for auto firms.

  1. By law the credit in the Inflation Reduction Act is supposedly available only when purchasing vehicles built with materials sourced primarily in the U.S.
  • However, nearly all battery materials are currently foreign-made and will remain so for ages.
  • An Inflation Reduction Act exception allowing credit for leased vehicles built with foreign materials. Evidently, the pen is mightier than the miner.
  • Thus, leasing has soared to over half of all EV sales in America, as  leasing is the only way to capture the federal $7,500 tax credit for most EVs.

The American government provides incentives and tax deductions to transition society to EV’s, but those incentives are financial incentives for the continuation of Child Labor and Ecological Destruction “Elsewhere”. Is it ethical and moral to provide financial support to the developing countries that are mining for exotic minerals and metals to build EV batteries for Americans?

The putative EV revolution is stalling for three main reasons, and not because of “dead robots” or the other road bumps in recent news. What will happen is that.

  1. We’ll run out of money to subsidize the common folk,
  2. We’ll run out of copper and other foreign sourced special metals.
  3. Car drivers will run out of patience in putting up with inconveniences.

International Energy Agency (IEA) reports that global gasoline consumption in 2023 blew past the pre-lockdown 2019 peak, even with roughly 30 million EVs on the world’s roads, up from near zero a decade ago. The primary reason may be that EV’s are mainly 2nd vehicles with low mileage vs the high mileage workhorse vehicles that are internal combustion engines.

The CO2 emissions arising from building an EV before it gets driven revolve around a simple fact: a typical EV battery weighs about 1,000 pounds. That half-ton battery is made from a wide range of minerals, including copper, nickel, aluminum, graphite, and lithium. Accessing those minerals requires digging up and processing some 250 tons of earth per vehicle, mostly in poorer developing countries with minimal labor laws and environmental regulations.

The battery pack is a complex electrochemical system made from hundreds or thousands of parts, including sensors, safety systems, cooling or heating systems, and a boatload of power electronics.

The underlying material requirements from developing countries is the single constraint that will cause the EV stall-out before other factors kick in. All the world’s mines, both currently operating and planned, can supply only a small fraction of the 700 percent to 4,000 percent increase in various minerals like copper, lithium, nickel, cobalt, and other rare earth elements that are essential components in many of today’s rapidly growing electricity technologies that will be needed to meet the wildly ambitious EV goals.

The rate of EV adoption is currently braking before there’s a battery-dominated future because, again, we’ll run out of money, copper, etc. and political tolerance for enriching other nations—especially China, where 50 percent to 90 percent of the critical materials are now controlled and produced and will be for years yet to come, no matter how lawmakers rewrite the sourcing regulations.

AGAIN, the elites have bought them and will continue to buy them, BUT we’re running out of elites to buy EV’s !

Please share this information with your friends to further enhance conversations about Energy Literacy as Breezes and Sunshine cannot manufacture anything. Electricity CANNOT exist without crude oil !

Ronald Stein P.E.

Ambassador for Energy & Infrastructure, Co-author of the Pulitzer Prize nominated book “Clean Energy Exploitations”, policy advisor on energy literacy for The Heartland Institute, and The Committee for a Constructive Tomorrow, and National TV Commentator- Energy & Infrastructure with Rick Amato.

Ronald Stein, P.E. is an engineer, energy consultant, speaker, author of books and articles on energy literacy, environmental policy, and human rights, and Founder of PTS Advance, a California based company.

Ron advocates that energy literacy starts with the knowledge that renewable energy is only intermittent electricity generated from unreliable breezes and sunshine, as wind turbines and solar panels cannot manufacture anything for the 8 billion on this planet.

Ørsted Abandons New Jersey Wind Projects

Offshore wind developer Ørsted said it is pulling out of its Ocean Wind 1 and Ocean Wind 2 projects off New Jersey, citing escalated financial difficulties and supply chain issues. 

“Ørsted has decided to cease the development of Ocean Wind 1 and 2,” said the company in its statement. The Ocean Wind 1 project would have been located about 15 miles off the shore of Atlantic City, and the Ocean Wind 2 farm would have been adjacent to it.

From Watts Up With That?

Ørsted, a major player in the offshore wind development sector, has decided to pull the plug on its Ocean Wind 1 and Ocean Wind 2 projects off the coast of New Jersey. Citing

“escalated financial difficulties and supply chain issues,”

https://www.nationalfisherman.com/mid-atlantic/-rsted-gives-up-on-new-jersey-wind-projects

Ørsted’s decision brings to light the tumultuous waters that renewable energy projects are now starting to regularly encounter.

“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,”

said David Hardy, group executive vice president and CEO Americas at Ørsted. This statement reflects the vulnerability of such grandiose renewable projects to economic fluctuations and logistical nightmares.

The cancellation of these projects is not just a setback for Ørsted but also dents the ambitious renewable energy goals of the United States. It came shortly after the Biden administration announced the final approval of the Coastal Virginia Offshore Wind project, which was touted as a significant milestone in the U.S. renewable energy landscape.

Local officials and communities in New Jersey, who had been at loggerheads with Ørsted and other state and federal agencies, welcomed this decision. They had been voicing their concerns and opposition against the potential impacts of the Ocean Wind 1 project.

“This is a great day for the people and businesses of Cape May County,”

said Len Desiderio, director of the Cape May County Board of Commissioners, reflecting the relief and vindication felt by the local communities.

Despite this setback, Ørsted continues to express its commitment to the U.S. renewable energy market.

“We remain committed to the U.S. renewable energy market, building clean power that will create jobs across technologies and states from the Northeast to Texas,”

Hardy said. However, the abandonment of the New Jersey projects raises questions about the feasibility and practicality of such commitments in the face of economic and logistical uncertainties.

Ørsted’s decision to abandon its wind projects off New Jersey is a stark reminder of the unpredictable and challenging nature of renewable energy projects. It underscores the need for a more realistic and pragmatic approach towards planning and executing all energy projects, putting engineering and economics ahead of political dictates, taking into consideration the various economic, logistical, and community-related factors that can impact their success.

Source: https://www.nationalfisherman.com/mid-atlantic/-rsted-gives-up-on-new-jersey-wind-projects

Volkswagen says EV orders are down 50% in Europe

Meanwhile, Volkswagen CFO and COO Arno Antlitz explained on a media call that EV orders in Europe are down to 150,000. That’s 50% lower than last year’s total of 300,000.

After releasing its results for the first nine months of the year, Volkswagen’s CFO said EV orders are down 50% in Europe. VW’s order intake fell short, attributed to a slowdown in the overall market, says electrek.co

The Volkswagen Group announced Thursday that EV deliveries increased by 45% YOY, reaching 531,500 in the first nine months of the year.

VW’s EV sales share stood at 9% in the third quarter for a total of 7.9% through September. The company said it remains on track to hit its (previously lowered) annual target of 8-10%.

Europe was Volkswagen’s biggest EV market, accounting for over 341,000 electric models (+61%) sold through September. China, the automaker’s biggest market in terms of profits, was next with 117,100 models sold (+4%). EV deliveries in the US rose 74% to 50,300.

Meanwhile, Volkswagen CFO and COO Arno Antlitz explained on a media call that EV orders in Europe are down to 150,000. That’s 50% lower than last year’s total of 300,000.

Europe accounts for over 64% of Volkswagen’s EV deliveries so far this year. Although deliveries grew slightly in China, Antlitz said the company could lose EV market share until new models built with XPeng begin rolling out.

Volkswagen EV orders fall in Europe

Despite EV orders falling significantly from last year in Europe, Volkswagen began seeing intake pick up in the third quarter.

Antiliz said although order intake was below targets, delivery momentum was expected to continue. He attributed the lower demand to the overall market trend.

Hildegard Wortmann, who oversees VW’s marketing and sales, explained earlier this month, “Our order intake is below our ambitious targets due to the lower-than-expected overall market trend.”

The VW spokesperson attributed the third-quarter growth to a high backlog waiting to be processed. He said that supply chain and logistics kinks are being smoothed out, leading to shortened delivery times.

Volkswagen lowered guidance earlier this year from 11% EV sales share to 8-10%. The automaker’s struggles led to production cuts in Germany last month over slowing demand.

Volkswagen ID.4 Pro (Source: VW)

The company hopes the “refreshed” ID.4 and ID.5, VW’s top-selling EVs, will help turn things around. The new models come with a new electric drive and battery, providing more range in addition to a modern infotainment.

Volkswagen ID.7 (Source: VW)

Read the full story here