Navigating Uncertainty: The Current State of U.S. Offshore Wind
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September 03, 2026
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Introduction: Industry at a Crossroads
Starting earlier this year, the federal government paid approximately $3.9 billion to unwind twelve offshore wind leases.1 The developers that held the leases are steering the proceeds into oil and gas and other energy projects instead. For an industry built on state procurement mandates and a steadily expanding project pipeline, the message is stark with even executed federal leases no longer secure. Project risk now reaches past permitting delays and construction pauses into lease security, capital allocation and investor confidence, while developers contend with rising costs.
These pressures have forced a broad reassessment of project viability and timelines. Several leading developers have canceled, halted investment in or unwound major projects, citing economic pressure and regulatory unpredictability. Federal lease cancellations and the settlements behind them have hardened the concern that capital once committed to offshore wind projects is already now flowing toward other energy investments. The uncertainty is no longer confined to early-stage development, but now reaches contracted projects and leases.
As the industry recalibrates, the focus is shifting from expansion to disciplined execution. Near-term priorities center on advancing projects that are under construction. With federal support receding, the burden of sustaining momentum falls to state governments, utilities and developers.
Federal Policy Reversals and Implications
Federal policy reversals in this area have accelerated in 2026. The January 2025 Presidential Memorandum2 permitting reviews and stop-work orders now read as prologue: together, they showed how quickly federal action could upend construction schedules, financing and investor confidence. By mid-2026, the risk had changed shape, from temporary pauses to outright lease cancellations, buyback settlements and pressure on developers to move capital out of U.S. offshore wind altogether. The pivot followed a series of court rulings against the administration’s suspension efforts. After federal judges enjoined the December 2025 lease suspensions imposed on five fully permitted projects under construction,3 the Trump administration turned to negotiated exits, buying out twelve leases for approximately $3.9 billion by August 2026.4
Negotiated Exits and Tax Policy
In March 2026, the Department of the Interior (“DOI”) and TotalEnergies agreed to end U.S. offshore wind development tied to the company’s New York Bight and Carolina Long Bay leases. Under the settlement, TotalEnergies will invest approximately $928 million in U.S. LNG and oil and gas activity, recover its offshore wind lease payments and forgo any new U.S. offshore wind development.5
The buybacks have since spread beyond a single developer with similar deals struck with other offshore wind players in the U.S. including Invenergy and RWE.6
Tax policy compounds the pressure. The One Big Beautiful Bill Act, signed by President Trump in July 2025, sharply accelerated the phase-out of federal clean energy incentives. Wind projects placed in service after December 31, 2027, lose eligibility for the 45Y Clean Electricity Production Tax Credit, unless construction began by July 4, 2026, a statutory deadline that has now passed.7 The law also tightened restrictions on foreign entities of concern and supply chain sourcing. For offshore wind, the net effect is less long-term tax support and more sourcing complexity, with the qualifying status of individual projects still unsettled.
Project Economics and Developer Retreat
Developers also face economic pressure. Inflation and higher interest rates have driven up costs for projects that are capital-intensive by nature. Rising costs have eroded profitability and developers including Ørsted,8 JERA Nex BP9 and Shell10 have moved to cancel projects, exit partnerships or scale back their U.S. commitments.
Taken together, the federal policy reversals and cost pressure described above point toward retrenchment. Against the former national target of 30 gigawatts (“GW”) of offshore wind by 2030, approximately 5 GW remains under construction, and few projects beyond that base appear likely to advance this decade.11,12 Developers are concentrating on projects already under construction while abandoning early-stage leases. Without federal alignment, ambitious state mandates cannot sustain the industry’s prior trajectory.
Cancellations, Buybacks and the State Response
Table 1. Recent U.S. Offshore Wind Project Cancellations and Lease Buybacks
| Project / Lease | Area | Status | Description |
|---|---|---|---|
| Ocean Wind I & II | New Jersey | Canceled (Oct. 2023) | Ørsted canceled both projects after cost escalation, supply-chain delays and rising interest rates made the existing OREC economics unviable.13 |
| Beacon Wind | Massachusetts / New York | Investment halted / U.S. market exit (Oct. 2025) | JERA Nex bp halted the project and exited the U.S. offshore wind market, citing ballooning costs, policy uncertainty and financing challenges.14 |
| Leading Light Wind | New Jersey | Canceled (Nov. 2025) | Invenergy and energyRe canceled the project as permitting uncertainty, supply-chain cost escalation and deteriorating economics undermined a viable offtake path.15 |
| Attentive Energy and Carolina Long Bay (TotalEnergies) | New York / New Jersey and North Carolina | Lease termination / buyback (Mar.–June 2026) | DOI / TotalEnergies agreement ended the offshore wind projects; TotalEnergies received lease-payment reimbursement, pledged not to pursue new U.S. offshore wind development, and redirected capital toward LNG and U.S. oil and gas projects. Seven states sued over the New York lease cancellation.16,17 |
| Bluepoint Wind and Golden State Wind | New York / New Jersey and California | Lease terminations / buyback (Apr.–June 2026) | Ocean Winds-led projects agreed to end leases in exchange for reimbursements tied to domestic fossil fuel investments.18,19 California issued notice of intent to sue over the Golden State Wind buyback.20 |
| Invenergy offshore wind lease portfolio | New York / New Jersey, California, and Maine | Lease terminations / buyback (June 2026) | The federal government agreed to pay Invenergy $765 million to terminate four early-stage offshore wind leases; Invenergy will redirect capital toward Midwest natural gas plants and Western geothermal projects.21 |
| Duke Energy Carolina Long Bay lease | North Carolina | Lease termination / buyback (June 2026) | Duke Energy agreed to terminate its Carolina Long Bay offshore wind lease and reinvest nearly $129 million in additional Carolinas power capacity, with potential nuclear, natural gas and grid investments.22 |
| RWE offshore wind lease portfolio | New York, California, Louisiana | Lease terminations / buyback (August 2026) | The federal government agreed to pay $1.22 billion to RWE in return for the latter agreeing to surrender three leases it owned for wind farms in federal waters and investing in LNG and natural gas plants.23 |
Source: FTI Consulting analysis based on publicly available company announcements and news sources cited herein.
State resilience is now defined less by responses to temporary construction pauses than by opposition to federal lease cancellations and buybacks. The 2025 freeze and stop-work orders were reversed in court on developers’ challenges; in 2026, states have taken the lead, shifting from construction schedules to lease rights, procurement planning and long-term energy strategy. In June 2026, seven states, led by New York, sued DOI and other federal agencies over the New York Bight lease cancellation and reimbursement agreement,24 and California separately issued a notice of intent to sue over the Golden State Wind buyback.25
Rather than pausing their ambitions, states are working to preserve the infrastructure that future development will require. California has committed roughly $226 million to offshore wind port upgrades, even as it moves to challenge the federal buybacks.26 Northeast and Mid-Atlantic states are meanwhile continuing to coordinate on shared transmission planning for future projects.27
The active pipeline retains real proof points. Vineyard Wind 1 completed turbine installation in March 2026,28 and Virginia’s 2.6 GW Coastal Virginia Offshore Wind project, under construction again since a federal district court issued an injunction in January 2026 allowing construction to resume,29 remains the sector’s key near-term anchor.
Outlook: Containment First, Recovery Uncertain
With federal support receding and lease security openly contested, the sector is shifting from growth to stabilization and value preservation. Whether it will stabilize is not yet clear: the buyback campaign remains active, the state lawsuits challenging the buyback settlements are unresolved and offshore wind projects remain exposed. The immediate task is to complete what is already underway while shielding lease rights and permits from further federal disruption.
Near-term stability will depend on preserving the regulatory approvals and lease rights that are in place. Neither can be taken for granted. Federal action in December 2025 suspended leases and halted fully permitted projects already under construction, and work resumed only once the courts intervened. Infrastructure investment continues to require targeted commitment that is difficult to justify without visibility into a forward pipeline, and progress is likely to remain incremental without renewed federal alignment.
The realistic near-term goal is risk containment, not expansion. Advancing the projects already under construction, retaining skilled workers and keeping suppliers engaged preserves the option to rebound if federal support returns, but that option diminishes the longer the pause lasts. A future policy reversal would take years to translate into new capacity. For developers and investors, what matters now is protecting projects under construction, coordinating closely with states and making deliberate portfolio decisions.
How We Can Help
FTI Consulting’s Power, Renewables and Energy Transition (“PRET”) practice combines deep knowledge and experience in the offshore wind sector with unparalleled strategic and financial advisory expertise, providing a broad array of services, including financial and operational due diligence, business transformation, recovery optimization, interim management and restructuring advisory. We help clients assess project viability and make portfolio decisions that preserve value, protect capital and position for long-term success.
Footnotes:
1: Brad Plumer, “Trump Administration to Pay German Firm $1.2 Billion to Cancel Wind Leases” New York Times (August 6, 2026)
2: The White House, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects,” (Jan. 20, 2025).
3: Environmental Defense Fund, “Courts Strike Down All Five Stop-Work Orders for Offshore Wind Projects” Press Release (Feb. 2, 2026)
4: Brad Plumer, “Trump Administration to Pay German Firm $1.2 Billion to Cancel Wind Leases” New York Times (August 6, 2026)
5: Stephanie Kelly and Jarrett Renshaw, “TotalEnergies abandons US offshore wind, will invest $1 billion in fossil fuel projects,” Reuters (Mar. 23, 2026).
6: Brad Plumer, “Trump Administration to Pay German Firm $1.2 Billion to Cancel Wind Leases” New York Times (August 6, 2026)
7: Arnold & Porter, “From IRA to OBBBA: A New Era for Clean Energy Tax Credits,” (July 2025).
8: Wayne Parry, “Wind industry deals with blowback from Ørsted scrapping 2 wind power projects in New Jersey,” Associated Press (Nov. 1, 2023).
9: Adnan Memija, “JERA Nex BP to Withdraw from US Offshore Market, Halts Beacon Wind Investment,” OffshoreWIND.biz (Oct. 21, 2025).
10: Shell, Press Release, “Shell withdraws from Atlantic Shores Offshore Wind, assigning its membership interest to existing joint venture partner EDF power solutions,” (Oct. 29, 2025).
11: Stateline, “Offshore wind triumphs over Trump in court, but future projects face delays” (Feb. 19, 2026).
12: Wood Mackenzie, US Wind Energy Monitor, Q2 2026, Press Release (July 2026) (offshore additions forecast to peak in 2027 as the remaining 5.2 GW under construction approaches completion).
13: Wayne Parry, “Wind industry deals with blowback from Ørsted scrapping 2 wind power projects in New Jersey,” Associated Press (Nov. 1, 2023).
14: Adnan Memija, “JERA Nex BP to Withdraw from US Offshore Market, Halts Beacon Wind Investment,” OffshoreWIND.biz (Oct. 21, 2025).
15: Diana DiGangi, “2.4-GW New Jersey offshore wind project canceled by developer,” Utility Dive (Nov. 13, 2025).
16: Stephanie Kelly and Jarrett Renshaw, “TotalEnergies abandons US offshore wind, will invest $1 billion in fossil fuel projects,” Reuters (Mar. 23, 2026).
17: Nichola Groom, “US states sue Trump administration over deal to scrap offshore wind project,” Reuters (June 2, 2026).
18: Jennifer McDermott and Matthew Daly, “Trump administration to pay 2 more companies to walk away from US offshore wind leases,” Associated Press (Apr. 27, 2026).
19: Nichola Groom, “US to end more offshore wind leases in exchange for fossil fuel investments,” Reuters (Apr. 27, 2026).
20: Reuters, “California threatens to sue Trump administration over offshore wind cancellation,” (June 23, 2026).
21: Reuters, “Trump administration to pay $765 million to scrap four more offshore wind leases,” (June 17, 2026).
22: Reuters, “Duke Energy to terminate North Carolina offshore wind lease,” (June 29, 2026).
23: Brad Plumer, “Trump Administration to Pay German Firm $1.2 Billion to Cancel Wind Leases” New York Times (August 6, 2026)
24: Nichola Groom, “US states sue Trump administration over deal to scrap offshore wind project,” Reuters (June 2, 2026).
25: Reuters, “California threatens to sue Trump administration over offshore wind cancellation,” (June 23, 2026).
26: Emma Penrod, “California to invest $226M in offshore wind ports amid federal cuts,” Utility Dive (Oct. 14, 2025).
27: Ethan Howland, “Northeast states eye offshore HVDC transmission as Trump drops wind fight,” Utility Dive (June 16, 2026).
28: Diana DiGangi, “Revolution Wind comes online, Vineyard Wind 1 completes construction,” Utility Dive (Mar. 16, 2026).
29: Dominion Energy, Press Release, “U.S. District Court grants preliminary injunction allowing Coastal Virginia Offshore Wind project to resume work,” (Jan. 16, 2026).
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Published
September 03, 2026
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