RWE Ends $1.22B in US Offshore Wind Leases, Redirects Investment to Gas
RWE's Strategic Shift Away from US Offshore Wind
By Nichola Groom
Deal Overview and Administration Policy
Aug 6 (Reuters) - German energy company RWE said on Thursday that it had reached a $1.22 billion deal with the Trump administration to cancel three offshore wind leases in U.S. waters and to direct the funds to LNG and natural gas power plant projects.
The deal is the fifth the administration has struck this year as part of its wide-ranging effort to stop development of U.S. offshore wind projects, which U.S. President Donald Trump regards as costly and ugly.
Impact on Offshore Wind Development
RWE, one of the world's top offshore wind developers, had stopped work on its U.S. projects last year due to the administration's efforts to thwart the industry, which included several orders to freeze multibillion-dollar projects under construction.
"After careful consideration, it was determined there is no path forward to permit these projects in the U.S. for the foreseeable future," the company said in a statement. "The company determined that this resolution best serves the interests of its stakeholders and allows it to direct resources toward energy projects that can be advanced with certainty."
Investment Redirection to Gas and LNG
Major Acquisitions and Orders
To that end, RWE said it would spend $900 million to acquire a 16% stake in a Louisiana LNG project. It also signed a $300 million turbine order for its pipeline of 15 natural gas peaker plants across the U.S. The company did not disclose the LNG project owner or turbine manufacturer. Australia's Woodside Energy Group is developing a Louisiana LNG terminal.
Industry and Government Reactions
The Interior Department, which oversees offshore wind development in U.S. waters, could not immediately be reached for comment.
Background on Offshore Wind Leases
Details of RWE's US Leases
The company holds three offshore wind leases in U.S. waters off the coasts of New York, Louisiana and California. Projects associated with the leases had been in very early stages of development and would not have come online until the 2030s.
RWE paid $1.1 billion for its lease off the coast of New York at a blockbuster auction held by the Biden administration in 2022. The remaining two leases cost a combined $163 million.
Broader Industry Context
Not including the RWE agreement, the administration has cut about $2.7 billion in deals with offshore wind developers TotalEnergies, Ocean Winds, Invenergy and Duke Energy, canceling nine federal leases this year. Ocean Winds is a joint venture between Portugal's EDP Renewables and France's ENGIE.
Environmental Group Response
A group of 50 U.S. environmental groups in May wrote to RWE CEO Markus Krebber asking him not to cut a similar deal.
(Reporting by Nichola Groom; Editing by Mark Porter)
