New York Awards Contracts for Three Offshore Wind Projects

 New York Awards Contracts for Three Offshore Wind Projects

· State supplying $300 million for two blade, nacelle factories

· Regulators rejected other developers’ bid to renegotiate deals

 

New York is aiming to have 9 gigawatts of offshore wind power in service by 2035.

 

By Will Wade

 

October 24, 2023

 

New York has selected three offshore wind farms to negotiate power contracts with the state as the industry faces increasing challenges from rising costs.

The contracts are part of a sweeping set of awards that also include 22 onshore renewable energy projects and will lead to the installation of as much as 6.4 gigawatts of clean energy, according to a statement Tuesday. That’s expected to be enough to power 2.6 million homes.

New York has some of the most ambitious climate goals in the US, and the latest measures are an important step in the state’s plan to get 70% of its power from renewable sources by 2030. However, the state is facing hurdles after costs for installing wind turbines at sea surged by 48%, likely threatening some existing contracts.

Read More: A 48% Surge in Costs Wrecks Biden’s Much-Lauded Wind-Power Plans

New York is aiming to have 9 gigawatts of offshore wind power in service by 2035. The projects announced Tuesday — which are south of Long Island — are:

·         Attentive Energy One, developed by TotalEnergies SE, Rise Light & Power and Corio Generation, with 1.4 gigawatts of capacity

·         Community Offshore Wind, developed by units of National Grid Plc and RWE AG, with 1.3 gigawatts of capacity

·         Excelsior Wind, developed by Copenhagen Infrastructure Partners, with 1.3 gigawatts of capacity

They’re all expected to go into service by 2030. The projects have an average weighted strike price — the all-in cost per megawatt hour to develop an offshore wind farm — of $145.07.

That’s about 28% higher than the average strike price for the state’s two prior offshore wind solicitations. However, developers that won contracts in the second round have been struggling as costs climbed, and in June asked regulators to approve higher prices. A spokesperson for Governor Kathy Hochul said the strike price in this round is about 13% lower than the increased figure those companies had requested, and which regulators rejected earlier this month.

President Joe Biden has set a goal of having 30 gigawatts of US offshore wind in service by 2030. That target is increasingly seen as under threat but the New York wind farms approved in this round would help by delivering about 4 gigawatts of combined capacity.

The state will also provide $300 million to help build two factories that will supply blades and nacelles for offshore wind turbines. That’s expected to be matched by an additional $668 million of private investment.

https://www.bloomberg.com/news/articles/2023-10-24/new-york-awards-contracts-for-three-offshore-wind-projects?srnd=gr

 

From NYSERDA web site:

2022 Offshore Wind Solicitation (Closed)

Under the New York State Public Service Commission’s (PSC) Order Establishing Offshore Wind Standard and Framework [PDF]  for Phase 1 Procurement, issued on July 12, 2018, Order Adopting Modifications to the Clean Energy Standard [PDF]  issued on October 15, 2020 in Case No. 15-E-0302, and most recently in the Order on Power Grid Study Recommendations [PDF]  issued on January 20, 2022 in Case Nos. 20-E-0197, 18-E-0071, and 15-E-0302, NYSERDA sought to procure Offshore Wind Renewable Energy Credits (ORECs) through this third solicitation (ORECRFP22-1). NYSERDA competitively selected three projects: Attentive Energy One (developed by TotalEnergies, Rise Light & Power, and Corio Generation), Community Offshore Wind (developed by RWE Offshore Renewables and National Grid Ventures), and Excelsior Wind (developed by Vineyard Offshore).

On October 24, 2023, Governor Hochul announced the largest state investment in renewable energy in U.S. history as part of New York's 10-Point Action Plan, further demonstrating New York’s leadership in advancing our nation’s clean energy transition. The provisionally awarded three new offshore wind projects are: Attentive Energy One (1,404 MW), Community Offshore Wind (1,314 MW), and Excelsior Wind (1,314 MW).

This combined portfolio of projects is expected to: 

• Generate enough renewable, locally-produced energy to power more than 2 million homes, or approximately 10 percent of New York’s electricity load.
• Deliver $15 billion in anticipated in-state spending, including $3.4 billion in commitments to spending in Disadvantaged Communities in alignment with the goals of New York’s Climate Act .
• Create more than 4,200 well-paying jobs, and commit over $100 million to training New York’s workforce to build and service offshore wind projects.
• Reduce greenhouse gas emissions by 7 million metric tons annually, the equivalent of taking over 1.6 million cars off the road every year. 
• Contribute more than $85 million to support wildlife and fisheries research, mitigation, and enhancement.
• Provide billions of dollars in public health benefits resulting from reduced exposure to harmful pollutants—including fewer episodes of illness and premature death, fewer days of school or work missed, less disruption of business, and lower health care costs. 

Demonstrating the State's commitment to ensuring these projects create quality, family-sustaining jobs for New Yorkers, the contracts upon full execution will include commitments to purchase certain minimum amounts of U.S. iron and steel and prevailing wage provisions for all laborers, workers, and mechanics performing construction activities. In addition, offshore wind project developers will be required to negotiate Project Labor Agreements among their construction contractors and a building and construction trade labor organization representing craft workers for the construction of the new renewable energy generation resources.

All three projects are anticipated to enter commercial operation by 2030. The average bill impact for customers over the life of the projects will be approximately 2.73 percent, or about $2.93 per month. The weighted average strike price of the awarded offshore wind projects over the life of the contracts is $96.72 per megawatt hour in 2023 (real) dollars, which equates to a nominal weighted average strike price of $145.07 per megawatt hour. The strike prices comprising the weighted average cited above are subject to certain adjustments in accordance with the terms of the awarded contracts, including, in some cases, adjustments based on certain price indices, interconnection costs and/or receipt of qualifying federal support.

Importantly, this announcement represented the first set of actions taken by the State as part of New York’s 10-Point Action Plan, announced by Governor Hochul and offering insight into how the Governor’s Administration plans to overcome macroeconomic and inflationary challenges that have impacted the renewable energy sector. These awards also deliver on Governor Hochul’s commitment to make New York State a hub for the U.S. offshore wind supply chain.

NYSERDA is awarding $300 million in state investment to enable the development of two marquee supply chain facilities, including nacelle manufacturing and assembly by GE Vernova, along with blade manufacturing developed by LM Wind Power Blades USA, both planned for New York’s Capital Region. Together, these two facilities, which represent nearly $1 billion in state and private investments, will have the capacity to supply almost one-third of the total regional demand for offshore wind by 2035. They will also create 1,700 direct and indirect jobs backed by prevailing wage and project labor agreements, and result in over $3 billion in direct spending in the State. Additionally, these projects also align with available federal tax credits, enabling future savings to New York’s ratepayers.

For more information on the awarded projects, please see New York’s Offshore Wind Projects webpage.