Equinor, BP seek 54% hike in US offshore wind power price, filings show - Reuters
Equinor, BP seek 54% hike in US offshore wind power price, filings show | Reuters
Equinor, BP seek 54% hike in US offshore wind power price, filings show
[1/2]A general view of the offshore wind farm Hywind Tampen, North Sea August 23, 2023. NTB/Ole Berg-Rusten via REUTERS/File photo Acquire Licensing Rights
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OSLO, Aug 31 (Reuters) - Norway's Equinor (EQNR.OL) and its partner BP (BP.L) are seeking a 54% increase for the price of power produced at three planned offshore U.S. wind farms, according to a filing made by a New York state regulatory authority.
The two partners in recent years won the rights to build the Empire Wind 1, Empire Wind 2 and Beacon Wind wind farms off the New York coast, which have a combined capacity of 3,300 megawatts, capable of powering millions of homes.
However, in a petition filed with the New York State Public Service Commission in June this year, they requested enhanced offshore renewable energy credits compared with terms originally agreed.
"Application of Empire/Beacon's request would result in a 54% increase on average across its portfolio of projects," a document filed by the New York State Energy Research and Development Authority (NYSERDA) now showed.
Norwegian business daily Dagens Naeringsliv first reported the figures filed to the commission.
According to NYSERDA, the so-called strike price for Empire Wind 1 would rise from $118.38 per megawatt hour (MWh) to $159.64/MWh and for Empire Wind 2 from $107.50/MWh to $177.84/MWh. Beacon Wind would see the strike price rise from 118.00/MWh to 190.82/MWh.
Equinor and BP argued that "rampant inflation, global supply chain disruptions and soaring interest rates associated with the COVID-19 pandemic, the Russia-Ukraine conflict and the increasing pace of the energy transition", drove up costs.
Citing similar pressures, Denmark's Orsted (ORSTED.CO), said on Wednesday it may book impairments of 16 billion Danish crowns ($2.3 billion) on its U.S. portfolio, sending its shares plummeting.
Equinor has not announced any impairments for its U.S. offshore wind business.
"Our starting point is we need a basic level of economics in the projects that we are sanctioning and that is also the case for Empire wind and Beacon Wind," an Equinor spokesperson said.
He declined to comment on the specific price calculations published by the New York regulator.
Meanwhile, a group representing New York's largest energy consumers responding to the petition, said the proposed price amendments would increase consumer costs for the three projects by $14.8 billion over a 30-year contract tenure.
The group asked the commission to decline the request, arguing "there are reasons to be skeptical of the suggestion" the project may be abandoned otherwise.
Reporting by Nora Buli; editing by David Evans
Our Standards: The Thomson Reuters Trust Principles.
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.