According to analysis by market research and business strategy consulting firm IntelStor, the application of tariffs, as well as the recent moves to halt or cancel offshore wind projects in the US, has now jeopardised more than $75-billion in investments, much of which was foreign direct investment.

IntelStor says this reduction in investment spans project capital expenditure (capex), port infrastructure improvements, factories and other supply chain investments, including the jobs not created and tax revenue not recognised, as well as a loss of a significant amount of research and development investment.

“The opposition exhibited by the current US Administration towards offshore wind energy has created too much uncertainty and many companies consider current policies and the application of tariffs to be a failure to foster an environment which is friendly to foreign investment.

“Project developers and investors are no longer comfortable, with renewable energy company RWE already publicly stating they are withdrawing from the market until more favourable investment conditions exist,” the consulting firm says.

It notes that savvy project developers and investors know that there is still “huge upside” opportunity to being involved in a market as large as the US has the potential to be.

“That is especially true when you are involved at an early stage and get first mover advantage in the market.”

IntelStor says the technical potential for offshore wind in the US still stands at more than 1 TW and the build-out of that technical potential could unlock more than $3-trillion in investment.

Given the current circumstances, IntelStor concludes that this is a setback for offshore wind in the US at this time, and not a permanent dissolution of the market potential.

“Unfortunately, this setback could be a lengthy one, delaying progress by at least five years, but we do not conclude that this is the end of offshore wind power in the US at this time.

“It merely demonstrates why companies cannot rely upon any single government administration to create and foster an environment where investors and manufacturers have certainty and confidence to invest.”

For a company such as Copenhagen Infrastructure Partners (CIP) or any other international investor right now with investment funds available to deploy, IntelStor says they are likely looking at a more stable and favourable market environment such as the UK, Germany, the Netherlands, Poland, as well as the Scandinavian countries.

The firm notes that it is even possible and likely that emerging markets such as Colombia, Brazil or Australia could see more money deployed which had previously been earmarked for the US.

“Once the US sees tens of billions in capital outflows from the USA and a lack of job creation, the situation in which projects are stalled will likely correct itself and a more favorable environment will be created to try and encourage investment to come back.

“As noted, $75-billion is a rather large number for the evaporation of capital investments, and it is impossible to avoid providing a justification to project developers and investors for these policies.”

In the meantime, IntelStor says it is likely that almost every offshore wind farm in the US will need to go to court to litigate the right to build the projects for which they already received approval.

“We believe this is a nonsensical waste of time and resources, especially at a time when the US is supposedly in the midst of an ‘energy emergency'.”