Offshore Wind Takes a Blow From Trump's Attacks on Clean Energy

President Donald Trump's orders to halt permits for new offshore wind projects appear to be taking a toll this week as one wind project lost a key investor, and a major wind power company replaced its leadership amid slumping stocks.

"The sector's outlook is very gloomy," Morningstar Senior Equity Analyst Tancrede Fulop told Newsweek via email.

Trump has long been critical of offshore wind, frequently making the false claim on the campaign trail that wind projects kill whales. Scientists say there is no evidence linking whale deaths to offshore wind power.

On his first day in office, Trump signed an executive order halting permitting of new offshore wind projects and withdrawing all areas in federal waters from wind energy leasing.

"All offshore wind projects that did not get a federal approval are now frozen," Fulop said.

Oil company Shell announced in a quarterly earnings call Thursday that it would exit a partnership with the Atlantic Shores wind project. That wind farm planned for waters along the New Jersey coast gained federal approval for construction in October but was the particular focus of Trump's ire. Trump wrote on his social media site that he wanted it "dead and gone."

Shell had partnered with EDF Renewables for the project but announced Thursday that it would write off its $996 million investment and pause involvement with Atlantic Shores.

EDF Renewables and Atlantic Shores media personnel did not respond to requests for comment in time for the deadline for this story. A brief statement posted Thursday on the Atlantic Shores website said the company is "committed to New Jersey and delivering the Garden State's first offshore wind project."

"Atlantic Shores intends to continue progressing New Jersey's first offshore wind project and our portfolio in compliance with our obligations to local, state and federal partners under existing leases and relevant permits," the statement read.

On the other side of the Atlantic, Denmark-based wind energy company Orsted announced Thursday that CEO Mads Nipper was stepping down as the company has endured an 80 percent drop in share prices since January 2021.

Orsted has been a driving force in many U.S. offshore wind projects, including some of the first to begin producing power off the coast of New England. In a statement Thursday, Orsted Chair Lene Skole cited "an increasingly challenging situation in the offshore wind industry," including changes to the regulatory landscape.

Morningstar's Fulop said he does not expect any changes to the offshore wind projects already underway.

"Construction looks too advanced to abandon them," he said. However, he added, the uncertainty around planned projects could exacerbate the industry's efforts to scale up construction capability.

"This is also negative for all in the supply chain, as evidenced by the decision of Italian cable manufacturer Prysmian to scrap its project for an offshore wind power cables factory in Massachusetts," Fulop said.

Prysmian announced earlier this month that it would not follow through with a planned facility on the site of a former coal power plant in Somerset, Massachusetts.

The offshore wind sector was already struggling before the November election as a mix of inflation, higher interest rates and supply chain problems made it difficult for companies to capitalize on incentives offered by President Joe Biden's administration.

"The changing dynamics of the markets over the past few years have created a series of headwinds for our offshore wind industry," Frank Macchiarola, chief advocacy officer for the American Clean Power Association, told Newsweek. ACP is a trade group representing clean power companies from solar, wind and other energy technology sectors.

Macchiarola said that despite the offshore wind sector's struggles, underlying market conditions still offer a course forward. Electricity demand is projected to rise sharply in the coming years, he said, especially in the states in the Northeast and mid-Atlantic where most offshore wind projects are planned. Those regions also face constraints on other forms of onshore power due to property prices, regulatory hurdles and community resistance to some types of energy development.

"I think market dynamics remain important," he said. "We're going to need more and more power."