New York released a new offshore wind solicitation on Thursday to keep the state on track to meet its renewable energy goals and support a nascent industry that has faced financial trouble in recent months.
Offshore wind is expected to play a major role in New York's plan to reduce carbon emissions by getting 70% of the state's electricity from renewable sources by 2030. It is also a pillar of President Joe Biden's plan to decarbonize the U.S. power grid and combat climate change.
The state said it is supporting the development of 9,000MW of offshore wind by 2035, enough to power up to six million homes.
There are, however, no offshore wind farms operating in New York. The first - Danish energy firm Orsted's 132MW South Fork project - is expected to produce its first power before the end of the year.
Offshore wind developers have threatened in recent months to cancel contracts to sell power in New York after dropping agreements in Massachusetts, Connecticut and New Jersey as soaring inflation, interest rates and supply chain problems have led to much higher costs to build projects than anticipated.
European energy companies Orsted, Equinor and bp have taken a combined $5 billion of writedowns on U.S. offshore wind projects that are not even completed, in part because their existing power sales contracts would not cover the cost of building and financing the projects.
The new solicitation will be open to all bidders, including those with existing contracts. This would allow the companies to re-offer their planned projects at higher prices and exit their old contracts.
The companies had said they could cancel power sales contracts after failing to convince the New York Public Service Commission (NYPSC), the state's utility regulator, to renegotiate the old contracts at higher prices.
Those offshore wind contracts, which were awarded in 2019 and 2021 before interest rates and inflation soared, were for Orsted's 924MW Sunrise, and the Equinor/BP joint venture's 816MW Empire Wind 1, 1,260MW Empire Wind 2 and 1,230MW Beacon Wind.
In a positive sign for offshore developers hoping to get more money for the power they will produce, the New York State Energy Research and Development Authority (NYSERDA), which runs the state's renewable solicitations, awarded three offshore wind contracts on October 24 at much higher prices than the earlier projects bid by Orsted, BP and Equinor.
(Reuters - Reporting by Scott DiSavino in New York and Nichola Groom in Los Angeles; Editing by Stephen Coates and Barbara Lewis)