EnergyOMNI's Perspectives｜$3.9 Billion Offshore Wind Lease Buyouts: Is the U.S. Government "Shooting a Corpse"?

Edited by EnergyOMNI

Since March 2026, the U.S. Department of the Interior has reached agreements with five offshore wind developers involving 12 offshore wind leases, with total compensation of approximately $3.9 billion. James Sallee, a professor at the University of California, Berkeley's Haas School of Business, commented: "The government just spent $3.9 billion of taxpayer dollars to shoot a corpse."

In his article, Professor Sallee noted that offshore wind is a highly capital-intensive industry that requires enormous upfront investment during the development stage, with costs recovered gradually over decades after commercial operation begins. In recent years, however, inflation has driven up the costs of steel, turbines, vessels, and labor, while higher interest rates have reduced the present value of future revenues and increased financing costs. For developers that had signed fixed-price power contracts, changes in economic conditions meant that the developers themselves had to bear the resulting capital cost risks.

In addition to inflation, developing offshore wind in the United States requires a substantial supply chain, including vessels that comply with the Jones Act. The Jones Act requires relevant vessels to be built in the United States, owned by U.S. citizens, and operated by U.S. crews. The U.S. Department of Energy estimated that achieving the Biden administration's target of 30 GW of offshore wind capacity by 2030 would require five to six wind-turbine installation vessels.

However, the United States currently has only one such vessel, the Charybdis, forcing other projects to rely on costly workarounds. As a result, several U.S. offshore wind projects had already begun to fall apart well before Trump took office. For example, in October 2023, Ørsted announced the cancellation of Ocean Wind 1 and Ocean Wind 2, citing high inflation, rising interest rates, supply-chain constraints, and vessel-related bottlenecks. In January 2024, Equinor and bp terminated the power contract for Empire Wind 2, citing inflation, borrowing costs, and supply-chain problems.

After President Trump took office and pledged to "end" the offshore wind industry, his administration introduced a series of policies unfavorable to the sector, including suspending the issuance of offshore wind lease approvals and requiring projects to halt construction.

Further Reading: The Trump Administration's Offshore Wind Storm in the United States

In addition, beginning in 2026, the Trump administration reached agreements with several developers whose projects had secured offshore wind leases but had not yet begun construction. Under these agreements, developers that relinquish their leases can recover the lease payments they had previously made, while the compensation is required to be redirected toward investments in the U.S. fossil fuel industry.

Further Reading: The Trump Administration Reaches a Fifth Agreement to Terminate an Offshore Wind Lease with a Developer

These settlement agreements concern development rights for offshore wind projects. Given current economic conditions, many of these development rights already appear to have limited economic value, or the projects were unlikely to enter the development stage in the near term. Higher interest rates and inflation, supply-chain constraints, tariffs, and fixed-price power contracts have all created significant headwinds for offshore wind development in the United States.

Meanwhile, the Trump administration's settlement agreements with developers did not stop projects that were already moving forward. At most, the government's buyouts may limit how quickly U.S. offshore wind could recover if economic and policy conditions improve in the future. In this sense, the government's actions appear to be, as Sallee put it, "shooting a corpse."

Even amid these headwinds, Revolution Wind, an offshore wind project in the New England region of the United States, announced in mid-September that it had successfully completed the installation of all 65 turbines. The developers said commissioning activities are continuing, with the project progressing toward an anticipated commercial operation date later this year.

Canary Media reported that four offshore wind farms in the United States are expected to be completed over the next two years. BloombergNEF estimates that the United States is now likely to have only about 6 GW of offshore wind capacity by 2035.

OSW project that will be operational in recent years

Source: Canary Media, Compiled by the author