US seeks to scrap offshore wind projects in exchange for fossil fuel deals

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The Trump administration is seeking to halt the remaining offshore wind projects in the US, offering buyouts to companies that are developing them in exchange for fossil-fuel investments.

The Department of the Interior had held talks with several companies with offshore wind leases to persuade them to enact deals such as the one agreed with TotalEnergies on Monday, people familiar with the matter said.

Under that agreement, the French oil company will be reimbursed the nearly $1bn it had poured into its offshore wind lease, and invest the funds in oil and gas projects.

The discussions mark a new phase of the US government’s battle against offshore wind, which President Donald Trump has described as the “worst . . . most expensive form of energy”.

Efforts to stop projects in the US have had mixed results. Pressure from the Trump administration played a role in halting Beacon Wind, a joint venture between BP and Jera, a Japanese power company, in October.

But a series of “stop work” orders issued by the administration against offshore wind projects led by Ørsted, Dominion Energy and Equinor have been blocked by court rulings following cases brought by the companies.

The Trump administration had claimed the projects posed a national security threat due to radar interference.

The government’s strategy has shifted towards incentivising companies to give up their leases — some of which cost hundreds of millions of dollars — and instead pump those funds into fossil fuel projects.

There are 43 active offshore wind leases off the coast of the US. Five US offshore wind leases are held by projects which are in late-stage construction or producing power, such as Ørsted’s Revolution Wind and Dominion Energy’s Coastal Virginia Offshore Wind project.

Offshore wind lease holders include a consortium of Portuguese company EDP and French Engie, which holds a $120mn lease in California.

Chicago-based independent power producer Invenergy has four leases on the east and west coasts of the US, including a site near New York which it, along with energyRe, obtained for $645mn.

German power company RWE paid $1.1bn in 2022 for a lease off the coast of New York, with the potential to host enough turbines to power 1.1mn homes. It also paid $4.3mn for a lease in the Gulf of Mexico and $157.7mn for a lease off the Californian coast.

The path to a deal is clearer for some companies than others. While Invenergy and RWE have and are planning significant gas investments in the US, Engie and EDP are renewables-focused companies.

“They would ideally want payment and a way out if they can, but unlike Total they can’t do this transaction with a pledge to invest in fossil fuels,” said a person familiar with the matter. “The question is whether they can find a mechanism that works.”

Some offshore wind projects are also near to completion. Equinor chief executive Anders Opedal said he wasn’t sure if any US government offer would be relevant to its Empire Wind project, adding that it was now more than 60 per cent complete.

“I think the starting point is quite different, compared to, what was announced [this week],” he said in an interview with the FT.

Invenergy and energyRe did not respond to requests for comment, while EDP declined to respond.

An Engie spokesperson said the company was in “regular contact with the authorities” about its three US wind projects, which are on hold.

Markus Krebber, chief executive of RWE, would not comment on whether the company was in talks with Washington about its lease. But he said one thing he had learnt was that fighting any government on the fundamentals of energy policy was not a wise decision.

“We were forced to exit nuclear and we went to courts and got a lot of money for that. We got compensation to get out of coal. And here they now get compensation to get out of offshore,” he said in an interview with the FT in Houston.