The US on Friday ordered Denmark's Orsted to stop construction on an offshore wind project near Rhode Island, in a move that threatens to exacerbate the company's financial troubles.
With construction now frozen at 80 per cent completion, Orsted has no immediate path to revenue generation, heightening pressure on the company as it seeks to shore up finances through a $9.4 billion emergency rights issue.
The stop-work order, issued by the Bureau of Ocean Energy Management (BOEM), is the administration's latest effort to hinder controversial and unpopular US renewable energy development and is the second time this year the Interior Department, which oversees BOEM, has halted work on a major offshore wind project.
"Orsted is evaluating all options to resolve the matter expeditiously," the company said in a statement, adding that it was reviewing the financial implications of the order and was considering legal action.
The company said it would "in due course" advise the market on the potential impact on its plans to conduct the rights issue.
A spokesperson for the company, owned 50.1 per cent by the Danish state, declined to comment further.
On his first day in office in January, President Donald Trump suspended new offshore wind leasing pending an environmental and economic review of projects. He has repeatedly criticized wind energy as ugly, unreliable and expensive.
The $1.5 billion project that Orsted was constructing, Revolution Wind, was scheduled to be completed next year and expected to produce enough electricity to power 350,000 homes in Rhode Island and Connecticut.
All offshore foundations had been installed and 45 out of 65 wind turbines were already in place, Orsted said.
The National Ocean Energy Industries Association, an industry trade group, said halting work on a project that is almost finished would jeopardize jobs and investment.
“These projects are not only about energy," NOIA President Erik Milito said.
The stop-work order is driven by unspecified national security concerns arising from the administration's review of offshore wind projects in federal waters, according to the letter, signed by BOEM acting Director Matthew Giacona.
The bureau is seeking to protect US national security and prevent, "interference with reasonable uses of the exclusive economic zone, the high seas, and the territorial seas," Giacona said.
Orsted is among the biggest global offshore wind companies, but its US business has suffered setbacks in addition to the broader challenges facing the global offshore wind industry, which is struggling to meet ambitious government targets amid soaring costs and project delays, despite enormous subsidies.
Earlier this month, Orsted sought the $9.4 billion of financing from shareholders to help fund its Sunrise Wind project off the New York coast after potential partners pulled out due to Trump's hostility to wind power.
Potential co-investors for the Sunrise Wind project pulled out after Trump's administration in April ordered Equinor to halt the development of a fully-permitted wind farm. The order, which sent shockwaves through the industry, was reversed the following month, however.
(Reporting by Nichola Groom and Stine Jacobsen; Editing by Leslie Adler, Sandra Maler, Cynthia Osterman, Aidan Lewis)