WIND

Half of US wind projects face major delays

Around half of US wind projects face significant delays in development and 30% are cancelled, Lawrence Berkeley National Laboratory has reported. We look at how much delays are costing wind and solar developers in the US, and how companies can best avoid them.

RICHARD HEAP

January 30, 2024

  • Thirty percent of US wind projects are axed after objections
  • Delays typically cost developers $200,000 per megawatt
  • Face-to-face engagement and facility tours boost support

 

Around half of US wind projects face significant delays in development and 30% end up being cancelled, the Lawrence Berkeley National Laboratory has reported.

Berkeley Lab is backed by the US Department of Energy, and this month published its ‘Survey of Utility-Scale Wind and Solar Developers Report’. This featured insights from a survey of 123 professionals at 62 wind and solar developers, about topics including the regularity and causes of development delays at US wind and solar projects. They also shared a data on the scale and cost of community opposition, and firms can tackle it.

The respondents to the survey also carry a great deal of influence. Berkeley Lab has said the 62 companies surveyed worked on around half of wind and solar capacity that was developed in the US between 2016 and 2023.

Respondents reported that developers lose on average $7.5m in sunk costs when a wind project is cancelled, compared to $2m in solar; and that delays cost them on average $200,000 megawatt in each sector. Those are big numbers and so it is worth investors in this sector being aware of the risks.

In addition, the survey contained insights that developers think community resistance to wind and solar projects has become fiercer in the last five years, as well as costlier and more organised. We can hypothesise why this might be, but the anti-wind rhetoric of the previous Trump administration combined with shady lobbying groups both have an effect.

This represents a real threat to the sector in the rest of this decade. Renewables firms may be confident that the Republicans would not reverse the Inflation Reduction Act if Donald Trump wins the presidency this year, as utility giant NextEra said in its annual results this week. But his longstanding criticism of the wind sector over the last decade may yet bear fruit if it influences the vocal minority to delay and derail projects.

Therefore, it is worth us spending a few minutes getting to grips with the key points.

 

Why delays happen

The results showed that solar projects were more likely than wind projects to face development delays of six months or more (see below, top graph), and that delays for both technologies were most likely in the permitting phase (see below, bottom graph). This likely reflects the vast amount of wind and solar projects waiting in queues for grid interconnections and the shortages of grid planners needed to consider them.

The research also shows that wind projects were more likely than solar to experience delays in the site control stage, which likely reflects the complexity of picking the right locations for wind turbines – and the community criticism they can attract. By contrast, solar farms faced more delays in construction, due to challenges in the supply chain.

 

 

Berkeley Lab also asked respondents why projects were being delayed. The top three reasons for delays to both wind and solar farms were community opposition, problems securing grid interconnections, and difficult local regulations (see below graph). Delays to wind farms averaged around 14 months, compared to around 11 months for solar.

 

 

Moreover, respondents said community opposition to wind and solar projects is more frequent than it was five years ago; was more likely to be driven by a vocal minority in a community, as well as outsiders; and that the most common objections to wind farms related to how they look, how they sound, and how they impact on both the character of communities and property values. None of these is a surprise. I started writing about wind farms in 2014, and those criticisms have been ever-present in those ten years.

However, we should welcome attempts by Berkeley Lab to put numbers on it – and to share developers’ views on how best to win community support for projects.

 

How to engage communities

The research said the most effective ways to win community support for wind projects tended to focus on face-to-face meetings, either at local meetings with stakeholders or local government; open-house meetings to help build community understanding of the project; and tours of similar facilities (see graph, below). These help developers to get beyond the stereotype of being faceless companies who ruin local areas.

By contrast, they claimed the least effective ways to engage communities were social media, local opinion polls, and project websites. It is worth noting that respondents did say these were all ‘somewhat’ effective, so there is no single solution to engagement.

 

 

This research provides developers and investors with data-backed insights about the frequency and cost of delays at US renewable energy projects. That can only be helpful as the US hurtles into a presidential election where the Biden administration’s support for renewables is likely to be a major talking point. For better or worse, what is said at national level does filter down into community support, or otherwise, for wind.