New York says no to renegotiating offshore wind power purchase ... - Splash 247
New York says no to renegotiating offshore wind power purchase deals - Splash247
New York says no to renegotiating offshore wind power purchase deals
The New York State Public Service Commission has denied petitions filed by a group of offshore wind developers seeking billions of dollars in additional funding from consumers for four proposed offshore wind projects.
The petitions were submitted by Empire Offshore Wind, Beacon Wind, and Sunrise Wind. In addition to the offshore wind projects, a state renewable energy trade association also wanted additional funding for 86 land-based renewable projects.
The petitions were seeking an adjustment to Renewable Energy Credit (REC) and Offshore Wind REC (OREC) power purchase agreements (PPAs) entered with the New York State Energy Research and Development Authority to address recent inflationary pressures that are impacting project economics.
The petitions generally stated that the effects of the COVID-19 pandemic have exposed the projects to unprecedented global and regional supply chain bottlenecks, high inflation, and increases in the cost of capital, driven by rising interest rates.
Further, the petitions identified impacts associated with the war in Ukraine, including increased demand for renewable energy and resulting shortages and price increases for key components and equipment.
The Commission denied financial relief stating that it wanted to preserve the competitive bidding process that provided critically needed renewable energy resources to New York “in the fairest and most cost-effective manner that protects consumers” and that the amendments sought by the developers were not “in the best interest of the State’s ratepayers.”
“On a monthly bill basis, granting the request to amend the executed contracts outside the competitive procurement process would have resulted in as high as 6.7% increases for residential customers and as high as 10.5% for commercial or industrial customers on monthly bills depending on service territory and the level of relief provided — above what was already committed,” the Commission explained.
The Commission added that the decision reaffirms that competitive procurement was the best, most efficient way to help New York reach its goal of having at least 70% of its electric load served by renewable energy by 2030, development of 9,000 MW of offshore wind energy by 2035 and meeting statewide demand with zero emissions resources by 2040.
Ørsted already put out a statement claiming that the rejection of the petition has put the development of the 924 MW Sunrise Wind project at risk. The Danish developer said it was reviewing the decision and that the project’s viability was extremely challenged without additional funding.
“The timely development of Sunrise Wind is critical to meeting the state’s 2030 clean energy targets. We will evaluate our next steps and communicate the status of the project as soon as possible as our joint venture and board consider the best options going forward in light of this decision,” Ørsted group executive vice president and chief executive for the Americas David Hardy said.
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.