The strangest part of America's latest offshore-wind retreat is not that several projects have been cancelled. Some were early-stage, expensive and increasingly difficult to permit. Weak projects should be allowed to fail.

The strange part is that the U.S. government is paying companies to abandon one energy technology and directing their capital toward another.

Between March and August, the Department of the Interior reached a series of agreements worth approximately $3.9 billion with TotalEnergies, Bluepoint Wind, Golden State Wind, Invenergy, Duke Energy and RWE. The arrangements differ, and some reimbursements remain conditional on matching investments. But the basic mechanism is consistent: relinquish offshore-wind leases, invest comparable sums largely in natural gas, LNG or oil, and recover the lease payments from the federal government.

The latest agreement provides RWE with $1.22 billion to resolve claims and surrender leases off New York, California and Louisiana. RWE is investing $900 million in Louisiana LNG infrastructure and has reserved $300 million of gas turbines for a pipeline of 15 peaking plants.

This is being presented as energy dominance. In reality, it is an unusually expensive bet that America's future competitiveness can be powered primarily by more of the fuel it already uses most.

This Is Industrial Policy Pointed Backwards

The administration argues that the leases were sold under unrealistic assumptions about subsidies, costs and permitting. There is truth in that criticism. U.S. offshore wind has been damaged by inflation, higher interest rates, supply-chain constraints and a permitting process capable of consuming most of a decade.

Yet these settlements are not the market independently choosing gas over wind. They are government agreements that socialize the cost of retreat and make reimbursement dependent on investment in politically preferred technologies.

TotalEnergies, for example, committed $928 million to LNG, oil and gas investments before becoming eligible for dollar-for-dollar reimbursement of its surrendered leases. It also agreed not to develop new U.S. offshore-wind projects. Bluepoint Wind made a similar commitment while redirecting up to $765 million into LNG. Invenergy's $765 million is going mainly to gas-fired plants across five states, with some geothermal investment. Related: America's $4 Billion Wind Retreat Is a Bet on Permanently Cheap Gas

That is not project selection. It is technology selection.

The most revealing evidence comes from what these companies are doing elsewhere. RWE has not concluded that offshore wind has no future. In the United Kingdom, it recently secured contracts for projects representing up to 6.9 GW of offshore-wind capacity. What RWE concluded is that U.S. offshore wind has no foreseeable permitting path.

The technology did not leave the market. The market left the United States.

Gas Is a Useful Partner, Not a Complete Strategy

The strongest defence of the policy is straightforward. America has abundant natural gas, electricity demand is accelerating, and gas turbines can provide power when wind and solar cannot. Data centres, manufacturers and households need reliable electricity now, not after another decade of litigation.

That argument deserves to be taken seriously. Natural gas will remain essential to the U.S. electricity system, particularly for flexibility and near-term capacity. But a useful balancing resource becomes a strategic vulnerability when it is allowed to dominate the portfolio.

Natural gas already supplied around 41% of U.S. utility-scale electricity in 2025. Adding more gas generation while deliberately removing wind options increases the amount of electricity whose price depends on a traded fuel. The fact that American gas is currently relatively cheap does not make it permanently cheap.

U.S. wholesale gas-price volatility reached 171% in February 2022. It eased afterwards, but returned above 100% in early 2025. Growing LNG exports also create an increasingly direct connection between domestic gas demand and events in Europe, Asia and the Middle East.

Wind and solar have intermittency costs, but no fuel-price risk. Once built, their marginal fuel cost is zero. Storage, transmission, flexible demand, nuclear, geothermal and gas can support them. This is why the economically rational system is a portfolio, not an ideological contest between molecules and electrons.

Replacing wind leases with gas assets may improve near-term dispatchability. It also removes part of the hedge against the next gas shock.

China Is Competing on Learning Curves, Not Rhetoric

The larger cost will not appear on an electricity bill next year. It will emerge through lost industrial capability.

China invested more than $625 billion in clean energy in 2024, almost twice its 2015 level. It now controls around 85% of solar manufacturing capacity and 80% of lithium-ion battery production capacity. Those positions were not created because every early factory or project was profitable. They were built through scale, repetition, supply-chain development and relentless cost reduction.

That is how new industries are won.

Europe remains slower, more expensive and far too bureaucratic. It is not comfortably winning the clean-technology race. But the European Union at least increasingly treats the transition as a matter of industrial competitiveness, resilience and strategic autonomy rather than environmental charity. Its objective is to reduce dependence on imported fossil fuels while retaining more of the technologies that replace them.

The difference matters. China is building dominant supply chains. Europe is trying to rebuild strategic capacity. The United States is reimbursing companies for leaving a future market and calling the result dominance.

Offshore wind is particularly important because the U.S. is not merely giving up electricity generation. It risks losing expertise in marine engineering, specialised vessels, subsea cables, floating platforms, ports and turbine components. Between 2022 and 2024, the domestic industry had already invested more than $6.8 billion in manufacturing facilities, ports, vessels and transmission infrastructure.

Supply chains do not wait indefinitely for political certainty. They move.

The U.S. Power Market Is Already Voting Differently

There is a final contradiction. American developers themselves are not abandoning clean electricity. The EIA expects a record 86 GW of new utility-scale generating capacity in 2026. Solar represents 51% of the planned additions, batteries 28% and wind 14%. Together, those technologies account for more than nine-tenths of the pipeline.

That does not mean gas is obsolete. It means the market sees value in fast construction, modularity and freedom from fuel costs. Policy is now pushing against the direction in which much of the investment pipeline is already moving.

A sensible administration could acknowledge that several offshore leases were uneconomic, negotiate orderly exits, reform permitting and reauction viable areas under better terms. It could support gas, nuclear and geothermal capacity without prohibiting companies from returning to wind. It could judge technologies by delivery, system value and cost.

Instead, Washington is using public money to narrow its own future options.

Four billion dollars is small compared with the scale of America's energy system. The signal it sends is much larger. Companies investing in long-lived factories, skills and supply chains now know that an American energy market can reverse direction with an election – and may pay them to dismantle the previous direction.

Energy dominance built on yesterday's fuels is not dominance. It is dependence with better branding.

By Leon Stille for Oilprice.com

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