U.S. Renewable Energy Resilience: Unlocking Onshore and Distributed Generation Opportunities Post-Offshore Wind Setbacks

The U.S. offshore wind sector has faced a series of setbacks in recent years, casting a shadow over its once-ambitious clean energy goals. From canceled projects to operational disruptions, the challenges—ranging from rising interest rates and supply chain bottlenecks to regulatory uncertainty—have delayed the Biden-Harris administration's 30 gigawatt (GW) target for 2030Cancellations reduce expected U.S. capacity of offshore wind^[1]. Yet, amid this turbulence, the onshore and distributed wind markets are emerging as resilient, undervalued alternatives. For investors, this shift represents a critical inflection point: a chance to pivot toward stable, scalable renewables that align with long-term energy transition strategies.

The Offshore Wind Dilemma: A Wake-Up Call

The offshore wind sector's struggles are well-documented. In 2023 alone, Ørsted canceled its Ocean Wind 1 and 2 projects in New Jersey, while the Icebreaker Wind project on Lake Erie was put on holdCancellations reduce expected U.S. capacity of offshore wind^[1]. By 2024, New York State Energy Research and Development Authority (NYSERDA) scrapped contracts for three offshore projects due to cost overrunsWind Market Reports: 2024 Edition^[2]. Even Vineyard Wind 1, the first major U.S. offshore project, faced a blade fracture in July 2024, halting production until late SeptemberWind Market Reports: 2024 Edition^[2]. These setbacks, compounded by the Jones Act's restrictions on foreign-built vessels and litigation delays, have exposed the sector's vulnerability to macroeconomic and regulatory headwindsWhy US offshore wind power is struggling^[4].

Onshore Wind: A Proven, Cost-Effective Alternative

While offshore wind stumbles, onshore wind remains a cornerstone of U.S. renewable energy. Despite a 27% drop in 2023 installations to 6.4 GW, the sector is poised for recovery, with Wood Mackenzie forecasting 7 GW in 2024 and 11 GW in 2025Cancellations reduce expected U.S. capacity of offshore wind^[1]. By 2025, cumulative onshore capacity is expected to surpass 160 GW, driven by turbine orders surging to 17 GW in 2023Cancellations reduce expected U.S. capacity of offshore wind^[1]. Texas, Illinois, and Kansas alone accounted for nearly half of 2023's additions, with Ørsted's Ford Ridge (120 MW) and Sunflower Wind (200 MW) projects exemplifying the sector's scalabilityOnshore Wind Energy & Our Wind Projects in the U.S. | Ørsted^[3].

The Inflation Reduction Act (IRA) has further bolstered onshore wind's economics, incentivizing domestic supply chain development and reducing project costsCancellations reduce expected U.S. capacity of offshore wind^[1]. However, challenges persist: rising material prices, high interest rates, and policy uncertainty—such as the temporary withdrawal of offshore wind leasing areas—have led to a 40% downgrade in long-term outlooksWhy US offshore wind power is struggling^[4]. Despite this, hybrid projects combining wind with battery storage and repowering older farms are gaining traction, offering a path to sustained growthCancellations reduce expected U.S. capacity of offshore wind^[1].

Distributed Wind: The Undervalued Frontier

Distributed wind energy, often overlooked in favor of its larger cousins, presents a compelling opportunity. The U.S. Department of Energy's 2024 market reports highlight the IRA's role in spurring near-term deployment, while the National Renewable Energy Laboratory (NREL) estimates a staggering 8,695 GW of technical potential for front-of-the-meter applications by 2022Wind Market Reports: 2024 Edition^[2]. By 2035, this figure could dip slightly to 7,796 GW, but the economic development potential remains immense, particularly in rural and agricultural regionsWind Market Reports: 2024 Edition^[2].

EDP Renewable Energy, a global leader in renewables, has underscored distributed wind's strategic value. With 1,104 MW of cumulative U.S. distributed wind capacity by 2022 and 1,745 turbines installed in 2022 aloneWind Market Reports: 2024 Edition^[2], the market is gaining momentum. EDP's U.S. onshore portfolio—now totaling 12,730 MW in 2025—reflects its confidence in the sector's stability, even as it postpones offshore projects like Southcoast Wind due to regulatory uncertaintyEDP Says US Renewables 'More Stable' After Offshore Wind Setback^[5]. The company's $20 billion investment in U.S. wind and solar projects underscores its commitment to hybridization and domestic supply chain strategies, such as its partnership with First SolarCancellations reduce expected U.S. capacity of offshore wind^[1].

Strategic Insights from EDP: A Blueprint for Resilience

EDP's approach offers a blueprint for navigating the post-offshore wind landscape. By prioritizing onshore and distributed generation, the company is leveraging its existing U.S. infrastructure while mitigating risks tied to offshore volatility. For instance, EDP Renewables North America (EDPR NA) has expanded its solar portfolio, including a 100 MW Amazon-backed solar park in Indiana and the Ragsdale Solar Park in MississippiCancellations reduce expected U.S. capacity of offshore wind^[1]. These projects not only support corporate sustainability goals but also inject capital into local economies, a dual benefit that aligns with the IRA's broader objectives.

Moreover, EDP's focus on hybrid projects—combining wind, solar, and storage—addresses intermittency concerns while optimizing land use. This strategy mirrors broader industry trends, as developers seek to maximize returns in a high-cost environmentWhy US offshore wind power is struggling^[4].

Market Projections and the Investment Case

The U.S. wind market is projected to grow from $18.2 billion in 2024 to $27.1 billion by 2032, at a 5.3% compound annual growth rate (CAGR)Wind Market Reports: 2024 Edition^[2]. Onshore wind currently dominates 65% of the market, driven by its cost-effectiveness and established infrastructureWind Market Reports: 2024 Edition^[2]. While offshore wind remains a high-growth segment, its challenges—spiral costs, unprofitable contracts, and political uncertainty—make it a riskier bet compared to onshore and distributed alternativesWhy US offshore wind power is struggling^[4].

For investors, the case for onshore and distributed wind is clear. These sectors offer:
1. Stability: Proven technology and infrastructure reduce execution risks.
2. Scalability: Projects can be deployed rapidly, with 80% of 2023 turbine orders expected to come online by 2025Cancellations reduce expected U.S. capacity of offshore wind^[1].
3. Policy Tailwinds: The IRA's tax credits and domestic manufacturing incentives create a favorable environmentWind Market Reports: 2024 Edition^[2].
4. Diversification: Hybrid projects and repowering strategies enhance resilience against market fluctuationsCancellations reduce expected U.S. capacity of offshore wind^[1].

Conclusion: A Call to Rebalance Portfolios

The offshore wind sector's recent struggles are a reminder that even the most promising clean energy technologies are vulnerable to macroeconomic and regulatory shifts. For investors, the lesson is clear: rebalance energy transition portfolios toward undervalued, stable renewables. Onshore and distributed wind, with their proven scalability, policy support, and economic benefits, are not just alternatives—they are the bedrock of a resilient energy future.

As EDP and others demonstrate, the path forward lies in leveraging existing strengths while innovating within constraints. For those willing to act now, the U.S. onshore and distributed wind markets offer a compelling opportunity to capitalize on the energy transition's next chapter.