Navigating the Storm: Strategic and Financial Risks in U.S. Offshore Wind Amid Trump-Era Policy Shifts

The U.S. offshore wind sector has long been a magnet for foreign investment, with Danish energy giant Ørsted (now Orsted) leading the charge. However, the Trump-era policy shifts from 2017 to 2021 created a volatile landscape, exposing foreign firms to unprecedented strategic and financial risks. This article dissects the implications of these policies on companies like Orsted and evaluates opportunities in resilient sectors and regions that have weathered political turbulence.

The Trump-Era Policy Tsunami

The Trump administration's approach to offshore wind was marked by abrupt regulatory reversals and a pro-fossil fuel agenda. On January 20, 2017, President Trump signed an executive order halting all federal offshore wind permits, leasing, and project approvals. This pause, initially framed as a temporary review, persisted for years, creating a vacuum of certainty. By 2025, the administration had further compounded the chaos with the One Big Beautiful Bill Act (OBBBA), which eliminated tax credits for wind and solar projects unless construction began within 12 months of enactment.

For Orsted, the consequences were severe. The company's Revolution Wind and Sunrise Wind projects, valued at $4 billion and $924 million respectively, faced delays, impairments, and a forced $9.4 billion capital raise. Orsted's 2023 impairment of $5.7 billion on its Ocean Wind 1 and 2 projects—canceled due to permitting delays—highlighted the financial strain. The administration's “Unleashing American Energy” executive order, which prioritized oil and gas over renewables, further eroded investor confidence.

Strategic Risks for Foreign Investors

The Trump-era policies introduced three critical risks for foreign firms:
1. Regulatory Uncertainty: Frequent executive orders and permit freezes made long-term planning impossible. Orsted's inability to sell a stake in its Sunrise Wind project—despite 35% completion—exemplifies how political shifts can paralyze capital flows.
2. Financial Volatility: Tax credit cliffs and permitting delays forced companies to accelerate timelines or face losses. Orsted's 2025 impairment of $575 million on the Revolution Wind project underscores the fragility of offshore wind's business model under such conditions.
3. Market Exit Risks: The administration's favoritism toward fossil fuels created an uneven playing field. Shell and Equinor, like Orsted, recorded billions in impairments, signaling a broader retreat from U.S. offshore wind.

Resilient Sectors and Regions

Despite the federal headwinds, certain U.S. states and international markets have demonstrated resilience.

1. State-Level Commitments:
- Washington, Minnesota, and North Carolina maintained aggressive renewable energy mandates, streamlining permitting and grid connectivity to meet clean energy targets. Minnesota's deputy commissioner, Pete Wyckoff, emphasized that wind and solar remain the most cost-effective solutions for meeting electricity demand, even without federal tax credits.
- New York and New Jersey continued to advance offshore wind projects, albeit with delays. The Empire Wind project, though temporarily halted by the Trump administration, resumed after negotiations with state officials.

2. International Markets:
- Europe and Asia have become safer havens for offshore wind investment. Orsted's pivot to projects in the UK, Germany, and South Korea reflects a strategic shift toward markets with stable regulatory frameworks.
- Emerging Markets: Countries like Brazil and Vietnam are fast-tracking offshore wind development, offering growth potential with less political risk.

Investment Advice for Navigating the Storm

For investors, the key lies in diversification and due diligence:
- Prioritize Resilient Jurisdictions: Allocate capital to states with long-term renewable mandates (e.g., Washington, Minnesota) and international markets with stable policies.
- Diversify Portfolios: Balance U.S. offshore wind investments with onshore solar and wind projects in states like Texas, which have less federal regulatory exposure.
- Monitor Policy Cycles: Given the cyclical nature of U.S. energy policy, investors should hedge against political risks by engaging in advocacy or partnerships with state governments.

Conclusion

The Trump-era policies have left a lasting scar on the U.S. offshore wind sector, but they have also revealed opportunities in resilient regions and international markets. For foreign firms like Orsted, the path forward requires adaptability and a focus on jurisdictions where policy stability aligns with long-term strategic goals. Investors who navigate this landscape with caution and foresight can still capitalize on the renewable energy transition, even amid political storms.