Equinor remains committed to completing its Empire Wind offshore wind project, an 810 megawatt farm off Long Island, New York, despite increased capital expenditure and ongoing political and legal challenges. The project is 60% built and has faced two stop-work orders from the previous US administration, which have contributed to delays and cost overruns.

Financial Commitment and Cost Adjustments

The company has raised its capital investment estimate for Empire Wind and the associated South Brooklyn Marine Terminal to $7.5 billion, up from a previous $7 billion. This increase is attributed to US tariff hikes and the impacts of the first stop-work order. However, this rise is offset by an increase in estimated Investment Tax Credits (ITCs), which have grown from $2 billion to $2.5 billion. The original financial close figure of $5 billion did not account for these future ITCs. To date, $4.5 billion has been invested, with 75% of the remaining $3 billion in spending planned for 2026.

Overcoming Legal and Political Hurdles

Construction resumed recently after a district court granted a preliminary injunction against the latest stop-work order, which was based on national security concerns. An earlier order, citing environmental review issues, was lifted after a month. The company's CFO stated the decision to proceed is based on solid forward-looking economics, with remaining investments covered by ITCs and operational cash flow, making the threshold to stop the project very high. The CEO noted that mitigation steps were taken around the second order, minimizing its impact on the project's execution.

Assessment of Political Risk

Equinor's CEO acknowledged that political risks in the US have been higher than anticipated, reflecting a broader trend where energy investments are becoming more politicized and polarized globally. This new environment necessitates a more careful evaluation of political risk in future decision-making processes. The CEO expressed confidence in the company's legal position, noting that preliminary injunctions have been granted for all five offshore wind projects halted in December, supporting the view that the stop-work orders were unlawful.

Project Outlook and Offtake Agreement

The project remains on schedule for full commercial operation within the next two years. It is supported by a 25-year fixed offtake agreement at $155 per megawatt hour and the $2.5 billion in ITCs. Company leadership praised the project team's performance amidst volatility and expressed pride in being on track to deliver.