Duke Energy said the costs of the joint project with the University of North Carolina at Chapel Hill (UNC-Chapel Hill), including permitting, design and construction, are no longer viable.
The company said it will instead work with the university to study the prospects for wind development offshore of North Carolina in the Atlantic Ocean.
Those waters are becoming more popular. Wind developer Apex Energy recently became the first to apply for a federal lease to enable the feasibility of an offshore North Carolina wind farm, according to local media.
Paul Newton, the senior vice president of strategy for Duke Energy’s franchised businesses, said: "As the team tackled this first-of-its-kind project, we realized that encouraging large-scale development of offshore wind resources is a better approach than enabling small demonstration projects that lack economies of scale."
The utility determined that for a three-turbine demonstration project, the first turbine would cost $88million and the second $14million.
It said the Pamlico Sound project also had a greater than expected potential of disturbing underwater plant growth.
Duke Energy said it will fund the completion of the university’s yearlong study of bird populations, begun through the Pamlico Sound project.
The utility will also provide $405,000 for a UNC-Chapel Hill coastal wind study.
North Carolina was one of 10 states to create the Atlantic Offshore Wind Energy Consortium, a group aiming to develop wind energy on the outer continental shelf.