The US Bureau of Ocean Energy Management has ordered a halt to work on the 810MW Empire Wind 1 project by Equinor off the coast of New York. This sets a chilling precedent for the US offshore wind and other types of infrastructure investors.
What is President Trump going to break this week?
At the start of this month, he sparked the sharpest drop in global stock markets since the beginning of the Covid-19 pandemic when he announced his ‘Liberation Day’ tariffs plan. This has led to a trade war between the US and China, with the US levying 145% tariffs on US-bound Chinese goods.
And now, the Trump administration has turned its attention back to offshore wind. On 16th April, the Department of the Interior’s Bureau of Ocean Energy Management ordered a halt to work on the 810MW Empire Wind 1 project by Norwegian energy giant Equinor. This is the first time this term that the Trump administration is halting a project that is ready to go.
Equinor has taken Empire Wind 1 to financial close despite significant Trump-driven uncertainty. Trump won his second presidential term on 5th November 2024 with pledges to halt work in the US offshore wind sector “on day one” after his inauguration. Despite this, Equinor achieved financial close in December after securing a $3bn funding package.
At the time, Equinor’s acting vice president for renewables Jens Økland called the close an “important milestone” that meant Equinor could enter “full execution mode”. The scheme appeared unaffected even when, on 21st January, Trump released an executive order to suspend offshore leasing rounds; to look at “alleged legal deficiencies” into the permitting of wind farms in US waters; and to launch a major review of the offshore wind sector.
But now, construction work has been halted indefinitely. Analysts have warned that this will have a “chilling” effect on the offshore wind sector and on other infrastructure investment in the US. Investors need the confidence that federal government will honour its contracts. This about-turn at Empire Wind 1 shows they can’t – and this could be particularly costly for Equinor.
$1.5bn drawn down
Equinor said in its statement about BOEM’s stop-work order that, by 31st March 2025, it has drawn down around $1.5bn from its project finance term loan facility. The utility is now working out the impact of the cancellation on the development and its project finance package.
Equinor clarified that subsidiary Equinor US Holdings has given guarantees for the equity commitment in the project financing. If the project is stopped, the $1.5bn that has already been drawn down would be repaid from the equity commitment in the project financing; and subsidiary Empire Offshore Wind would be exposed to termination fees to suppliers. These suppliers including Vestas, which has committed to provide 54 of its 15MW turbines for Empire Wind 1.
The utility is expected to reveal more about the impact of the stop-work order in its first-quarter financial results, which are due out on 23rd July. The halt will also delay the project timeline whereby first power was due in late 2026 and full commissioning in 2027.
Industry experts have warned this decision will have ramifications beyond offshore wind.
Liz Burdock, president and chief executive at offshore wind industry body Oceantic, said it would set a dangerous president and should “send chills across all industries investing in and holding contracts with the United States Government”.
She said: “Preventing a permitted and financed energy project from moving forward sends a loud and clear message to all business… that their investment in the US is not safe.”
Jason Grumet, chief executive of the American Clean Power Association, said this decision undermines Trump’s ‘energy abundance’ agenda.
“[T]his is the literal opposite of an energy abundance agenda,” he said. “With skyrocketing energy demand and increasing consumer prices, we need streamlined permitting for all domestic energy resources. Doubling back to reconsider permits after projects are under construction sends a chilling message to all energy investment,” he said.
And Doreen Harris, president and chief executive at the New York State Energy Research & Development Agency, said that Empire Wind 1 is “New York’s largest energy infrastructure project in 50 years” and the halt undermines Trump’s focus on locally produced energy.
She argued that BOEM’s interference at Empire Wind 1 “ignores the reality surrounding the future energy security of our state and country” and is “fuelled by a shortsighted political agenda that ignores the well-demonstrated economic benefits” of renewable energy.
The irony in the about-turn at Empire Wind 1 is the project received its federal lease on 15th March 2017 during the first Trump administration. But those working in offshore wind can be in no doubt that Trump is taking a harder line against their industry than during his first presidential term, just as he is diverging from precedents in how he handled the US economy in that first term.
Infrastructure investors must now step carefully if they are to cope with the unpredictable.
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