Dive Brief:
- New York has offered new contracts to offshore wind farms in development by Equinor and Ørsted following an expedited bidding process that launched in November, according to an announcement from Governor Kathy Hochul.
- The new contracts will cost the average consumer about 2% more, according to a statement by the governor, and will require developers Equinor and Ørsted to commit to providing additional economic development benefits above and beyond their original contracts.
- By allowing developers to re-bid their offshore wind contracts, New York likely prevented the projects from being canceled, according to Sam Salustro, vice president of strategic communications for the Oceantic Network, an offshore wind industry group.
Dive Insight:
New York state has secured $2 billion in economic development, 800 jobs and more than 1.7 GW of clean energy by awarding two new contracts to Equinor and Ørsted for wind farms that are already nearing completion, according to Hochul.
The New York governor announced on Thursday that Equinor's Empire Wind 1, an 810-MW wind farm located 15-30 miles southeast of Long Island, and Ørsted's 924-MW Sunrise Wind, located 30 miles east of Montauk Point, will be offered new contracts following the state's 2023 Offshore Wind Solicitation. Both projects had pre-existing contracts with the state, but were able to bid into the solicitation under New York state rules intended to allow bids from wind farms that needed new contractual terms to remain financially viable.
Under the terms of the request for proposals, the two projects' pre-existing contracts will be terminated and replaced by the new contracts following final award negotiations.
New York is not the first or only state to allow distressed wind farms to re-bid their contracts in the wake of several project cancelations over the past few years, Salustro said — other states, including New Jersey, Massachusetts, Rhode Island and Connecticut, have pursued similar actions. And it is likely, he said, that these solicitations have allowed projects — including wind farms such as Sunrise Wind and Empire Wind 1, which Hochul described as being ready to begin construction — to continue.
Indeed, Ørsted indicated in a January 24 announcement that it planed to acquire Eversource's interests in the Sunrise Wind farm and that if the effort to re-bid the project's contract were unsuccessful, the project's existing contract would be canceled. The agreement to buy out Eversource's share of the project was also conditioned on the success of the re-bid.
Thursday's announcement probably won't be the last of its kind. Salustro said that a handful of offshore wind developments remain locked into contracts they will either need to cancel or re-bid in order to remain financially viable. But he said he believes the industry has turned a corner.
“In many ways we feel like the pivot has been made, and we're going to start seeing a lot more new projects, alongside projects that are being restructured,” he said.
