New York officers put forth conditional contracts to purchase electrical energy from two proposed offshore wind farms, saying the awards Feb. 29 for installations that may be the biggest energy technology tasks constructed within the state in a long time.
The solicitation by the New York State Power Analysis and Growth Authority (NYSERDA), which allowed builders to exit outdated contracts in favor of recent, extra economically-friendly offers, resulted in contracts for the Empire Wind 1 mission from Norway’s Equinor, and the Dawn Wind set up being constructed by Denmark’s Orsted and U.S. utility Eversource.
The NYSERDA program is designed to assist New York’s offshore wind business, and supply extra impetus for the state’s clear vitality targets. New York has a purpose to develop 9,000 megawatts of offshore wind technology capability by 2035. Dawn Wind (924 MW) and Empire Wind 1 (810 MW) will contribute greater than 1,700 MW towards that concentrate on. The wind farms are anticipated to come back on-line in 2026 and 2027, respectively.
Offshore Wind ‘Foundational’
“I promised to make New York a spot for the renewable vitality business to do enterprise, and we’re delivering on that promise,” New York Gov. Kathy Hochul mentioned in a press release. “Offshore wind is foundational to our battle towards local weather change, and these awards display our nationwide management to advance a zero-emissions electrical grid at one of the best worth to New Yorkers.” The tasks can now enter into contracts to promote Offshore Wind Renewable Power Certificates (ORECs) to NYSERDA on behalf of New York electrical energy clients.
The U.S. so far has put in greater than 240 MW of offshore wind technology capability off the coasts of New York, Massachusetts, Rhode Island, and Virginia. That’s up from 42 MW at the moment final yr.
Builders of U.S. offshore wind tasks, together with a few of their world counterparts, have mentioned the business is going through challenges from increased building prices, together with points brought on by elevated rates of interest for financing. Provide chain points additionally proceed to weigh on some tasks. Offshore wind builders historically signal long-term agreements, detailing the speed clients can pay for electrical energy and the way a lot they are going to use, early within the technique of designing a wind farm. The shortage of flexibility in these contracts meant the builders could be on the hook for rising prices.
That led builders final yr to cancel contracts to promote 5.5 GW of offshore wind vitality alongside the coast of the U.S. Northeast.
Equinor and Orsted every have mentioned the economics of their U.S. offshore wind tasks are being challenged, and each teams needed to cost clients extra for the electrical energy from their installations. New York officers didn’t comply with that plan, however did say corporations may rebid tasks to maybe enhance the financial outlook. The businesses on Thursday mentioned they are going to now negotiate closing phrases for 25-year contracts. Every group mentioned the offers are anticipated to be executed by mid-year.
Orsted late final yr mentioned it could cease improvement of two offshore wind farm tasks off the coast of New Jersey attributable to rising prices. The corporate on the time mentioned that ending the Ocean Wind 1 and a couple of tasks, with mixed technology capability of two,248 MW, may lead to greater than $5 billion in impairment costs.
‘New Starting’
“This can be a promising new starting for Empire Wind 1 and we’re able to get began,” Equinor Renewables America President Molly Morris mentioned in a press release. Equinor’s mission proposal consists of remaking a marine terminal in Brooklyn right into a staging and port facility for offshore wind improvement.
“We applaud the Hochul administration for his or her steadfast assist of fresh, renewable offshore wind energy. These awards for the Dawn Wind and Empire Wind 1 tasks display the state’s dedication to offshore wind and diversify its vitality portfolio, representing a big step ahead to constructing a sustainable vitality future for generations to come back,” mentioned Anne Reynolds, vice chairman for Offshore Wind on the American Clear Energy Affiliation, in a press release emailed to POWER. “By investing in and advancing offshore wind improvement, New York is paving the way in which for different states and areas to comply with swimsuit, enabling a nationwide shift towards a low-carbon future that can create jobs, revitalize ports, and improve grid reliability.”
Orsted beforehand had mentioned it could purchase Eversource’s 50% stake within the Dawn Wind mission, although Eversource nonetheless would direct the wind farm’s onshore building. The utility in a press release mentioned, “Upon the completion of a profitable sale, Eversource not expects to have any danger publicity associated to Dawn Wind, together with abandonment prices that have been assumed in its impairment evaluation.”
Dawn Wind is anticipated to be the biggest U.S. offshore wind mission as soon as full, primarily based on present U.S. set up introduced timelines. Equinor and BP earlier this yr mentioned they might finish the teams’ 1,260-MW Empire Wind 2 mission, citing “industrial situations pushed by inflation, rates of interest and provide chain disruptions.” Equinor on Thursday mentioned the corporate “intends to usher in a associate to reinforce worth and scale back possession share and publicity” in Empire Wind 1.
—Darrell Proctor is a senior affiliate editor for POWER (@POWERmagazine).
