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New York launches bid to save floundering offshore wind projects

By Benjamin Storrow | 11/30/2023 04:21 PM EST

Projects are facing higher construction and financing costs.

Two offshore wind turbines stand off the coast of Virginia Beach.

Two offshore wind turbines stand off the coast of Virginia Beach, Virginia, on June 29, 2020. Steve Helber/AP

New York extended a lifeline Thursday to four offshore wind projects struggling to stay afloat, saying it will accept bids for new offshore wind proposals until the end of January.

The announcement is part of New York’s plan to rescue offshore wind projects struggling with higher construction and financing costs.

It opens the door for four offshore wind projects to be paid higher electricity prices for their power after state regulators their existing power contracts in October. In its ruling, the state Public Service Commission said it did not want to set a precedent where renewable developers could come back to the state and ask for higher prices after winning a competitive bid for state offshore renewable energy credits.

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But offshore wind remains critical to the state’s climate goals, and New York Gov. Kathy Hochul (D) on new projects. Thursday’s announcement by the New York State Energy Research and Development Authority is central to that effort.

Issuing contracts to offshore wind projects is usually a lengthy process.

NYSERDA recently awarded contracts to three projects . But the state is moving quickly to keep up the rate of development. NYSERDA said bids for the current round of proposals would be accepted until Jan. 24, and that the state would make an award the following month.

“These expedited solicitations will continue to build upon our momentum toward achieving a zero-emissions electric grid,” NYSERDA President and CEO Doreen Harris said in a statement. “We welcome into this competitive process all developers who are committed and eager to participate in New York’s energy transition, and we look forward to working together to deliver significant economic, public health, and grid reliability benefits to New York State.”

While the bids are open to all developers capable of serving the state, the expedited bidding process is widely viewed as an attempt to rescue one project planned by Ørsted and Eversource Energy, and three projects developed by Equinor and BP.

Both joint ventures have signaled they plan to rebid their projects.

Developers that acquired leases in the narrow stretch of ocean between New York City, Long Island and New Jersey last year could conceivably bid. Companies with leases east of Long Island could also bid.

But the projects that have already received state contracts have a leg up from the standpoint that they are further along in the federal permitting process and, in some cases, are ready to break ground on construction.

The contracts issued by New York recently provide a price benchmark for the upcoming bids.

The average price paid to the three projects receiving a contract was $145 per megawatt-hour. Ørsted initially requested a $139-per-MWh adjustment for its Sunrise Wind project, a 27 percent increase over the price initially agreed to with the state. Equinor and BP sought an average price of $176 per MWh for their three projects, up from an initial price of $113 per MWh.