RWE, Trump administration reach $1.22 billion agreement to cancel offshore wind leases

Summary

• RWE will shift investment to gas projects, including Louisiana LNG and US gas power plants
• Deal is Trump administration's fifth offshore wind lease cancellation agreement this year
• RWE had stopped work on US offshore wind last year, citing Trump administration moves against industry

German energy company RWE (RWEG.DE) said on Thursday that ‌it had reached a $1.22 billion agreement 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 arrangement is the fifth, and largest, the administration has entered into 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. His administration has sought to increase domestic fossil fuel production and ​scrapped policies that support clean energy development.

"Americans deserve an energy system built on common sense, not one dependent ⁠on costly subsidies or technologies that can't meet our country’s current demand," Interior Secretary Doug Burgum said in a statement welcoming RWE's agreement.

RWE, one ​of the world's top offshore wind developers, 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.

RWE 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.

"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."

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.

The company 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 (WDS.AX), opens new tab ​is developing a Louisiana LNG terminal.

Chuck ​Schumer, the top Senate Democrat, ⁠criticised the move by the Republican administration.

"Trump is again spending billions of taxpayer money to limit the U.S. energy supply in favor of exporting more energy to countries like China," Schumer wrote in a post on ​X. "This will only make your utility bill MORE expensive."

Not including the RWE agreement, the administration this year ​has agreed to ⁠return about $2.7 billion to offshore wind developers TotalEnergies (TTEF.PA), opens new tab, Ocean Winds, Invenergy and Duke Energy (DUK.N), opens new tab and cancel nine federal leases. Ocean Winds is a joint venture between Portugal's EDP Renewables (EDPR.LS), opens new tab and France's ENGIE (ENGIE.PA), opens new tab.

All of those agreements included pledges to direct investments into fossil fuel projects.

A group of 50 U.S. environmental groups in May wrote to ⁠RWE CEO ​Markus Krebber asking him not to cut a similar deal.

Seven states are challenging the TotalEnergies ​arrangement in court, alleging the administration failed to follow proper administrative processes and misused a government fund reserved for legal settlements even though there was no litigation between the ​parties.

California has also threatened to sue over the cancellation of an Ocean Winds lease off its coastline.