Developers rebid offshore wind contracts in New York’s fourth solicitation as Equinor and BP split
Developers rebid offshore wind contracts in New York’s fourth solicitation as Equinor and BP split | Utility Dive
Dive Brief:
- The New York State Energy Research and Development Authority announced Thursday that it had received bids from three projects in its fourth offshore wind solicitation, which was launched with an eye toward allowing developers to rebid contracts that had become financially nonviable.
- Equinor rebid its 816-MW Empire Wind 1 project after announcing a split with previous co-developer BP that will see Equinor taking full ownership of the Empire Wind lease and projects, while BP takes ownership of the Beacon Wind lease and projects.
- Ørsted also rebid its 924-MW Sunrise Wind project in the solicitation, while RWE and National Grid submitted a bid for a second 1.3-GW Community Offshore Wind project, after the first was awarded a power supply contract in October.
Dive Insight:
In addition to the split on the Empire Wind 1 project, “a mutual termination agreement has also been reached with [NYSERDA] for the Beacon Wind 1 Offshore Wind Renewable Energy Certificate,” Equinor said in a release.
The developer said that its split with BP will give each company “the flexibility to pursue their respective priorities under their corporate strategies.”
Ørsted also reached an agreement last week with Eversource to acquire its 50% stake in their joint Sunrise Wind project, though the “acquisition is subject to the successful award of Sunrise Wind” in the fourth solicitation, Ørsted said in a release.
“If Sunrise Wind is not successful in the solicitation, the existing [Offshore Wind Renewable Energy Certificate] contract for Sunrise Wind will be canceled per the state’s requirements, and Ørsted’s and Eversource’s 50/50 joint venture for Sunrise Wind will remain in place,” said Ørsted. “In that scenario, the joint venture will evaluate its next steps.”
Equinor noted Friday that the OREC agreement for Empire Wind 2, a proposed 1,260 MW project, was canceled earlier this month “as part of a strategic reset due to macroeconomic factors,” but “Empire Wind 1 is in a clear position to move forward in NY4, while Empire Wind 2 will be further matured for future solicitation rounds.”
The fourth solicitation was designed to account for the recent economic turmoil the U.S. offshore wind industry has experienced, which has seen multiple developers attempting to exit and rebid contracts, or canceling projects altogether.
NYSERDA launched its fourth offshore wind solicitation in November and said that it had reduced bid fees, “significantly streamlined” submission requirements, and would provide flexibility for different proposal options.
NYSERDA plans to notify developers of final awards in February, and execute on the contracts in the second quarter.
Community Offshore Wind’s developers said in a release that their bid into the fourth solicitation builds on a “provisional offtake award” for another 1.3 GW project which was received in the third solicitation.
“Combined with its provisionally awarded New York project, Community Offshore Wind is on track to deliver nearly $100 million in workforce and economic development investments,” RWE and National Grid said in a joint release. “The new proposal includes nearly $50 million in funding for workforce and community initiatives.”
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.