Smart Grid Observer


New York Finalizes Contracts for Largest Offshore Wind Procurement in U.S.

Ocotber 24, 2019    |   back to news

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New York Governor Andrew M. Cuomo recently (10/23) announced that the New York State Energy Research and Development Authority has finalized contracts with Equinor Wind US LLC for its 816 megawatt Empire Wind Project and Sunrise Wind LLC (a joint venture of Ørsted A/S and Eversource Energy) for its 880 megawatt Sunrise Wind Project to deliver affordable renewable energy to New Yorkers. As the largest procurement for offshore wind in the nation's history, this announcement advances Governor Cuomo's Green New Deal goal to develop 9,000 megawatts of offshore wind by 2035 and position New York State as the regional hub of this rapidly growing industry in the United States.

"New Yorkers know all too well the devastating impacts of climate change and the catastrophic consequences if we do not act urgently," Governor Cuomo said. "By finalizing the contract awards for the nation's largest offshore wind procurement, we are realizing the positive impacts these projects will have on the environment, while diversifying our economy and bringing significant economic benefits to the Empire State."

"We are committed to supporting offshore wind projects as part of our efforts to increase renewable energy," said Lieutenant Governor Kathy Hochul. "These significant contracts build on our aggressive clean energy goals to reduce emissions and combat climate change. New York is leading the nation working to protect our environment and make sure it is cleaner and greener for future generations."

NYSERDA also concurrently submitted its comprehensive filing, "Launching New York's Offshore Wind Industry: Phase 1 Report," to the New York State Department of Public Service. The Report documents the successful results of New York's first large-scale offshore wind solicitation with a combined total capacity of nearly 1,700 megawatts and provides important details about these highest scoring projects.

As detailed in the Report submitted to DPS, the State's first large scale offshore wind solicitation resulted in Offshore Wind Renewable Energy Certificate prices approximately 40 percent less than projected by NYSERDA's 2018 analysis [PDF], signaling that the costs to deploy offshore wind are rapidly declining. An OREC represents the environmental benefits associated with one megawatt-hour of electricity generated from offshore wind resources and consumed by retail customers in New York State. By compensating offshore wind generators for these investments, ORECs provide financial support necessary to lay the groundwork for the industry to take root, which will yield growing dividends for New Yorkers as the industry matures. These projects are priced competitively relative to recent results from New Jersey and several New England states while also delivering significant new port infrastructure investments, public-private workforce training commitments and thousands of well-paying job opportunities.

The Report's key findings include:

  • Unprecedented competition: New York's first procurement garnered the most competitive market response to date among all U.S. state offshore wind solicitations. With four developers submitting a total of 18 proposals, the proposals demonstrated New York's unparalleled reach to existing lease areas spanning New England to New Jersey, including areas leased through the federal Bureau of Ocean Energy Management's most recent December 2018 auction. In addition, this response demonstrates that the New York State procurement mechanism for ORECs is widely seen as attractive to private developers in the U.S. offshore wind market.
  • Cost-effectiveness: The Empire Wind and Sunrise Wind projects have an average all-in development cost of $83.36 per megawatt hour (2018 dollars) with an expected average OREC cost of $25.14 per megawatt hour. The average bill impact for residential customers will be less than a dollar per month per customer - approximately $0.73.
  • Innovative Contracting Structure: The contracts utilize an innovative Index OREC contracting structure where payments rise and fall inversely to a composite average of New York's energy and capacity market prices markets, which do not reflect actual project revenues. This structure provides protection for ratepayers against volatility in utility bills and projects in project revenue over the contracts' 25-year lifetime.
  • Environmental, Fishing and Ocean Use Priorities: The award group demonstrated a strong commitment, through the adoption of mitigation plans, to actively address the interests of ocean users such as commercial and recreational fishing and environmental stakeholders, and also ensure that coastal communities will be fully engaged and informed during the development and construction process.
  • Protecting New York Families: Additionally, projects will provide approximately $700 million of avoided health impact benefits in the form of avoided hospitalization and premature death associated with asthma and respiratory and cardiovascular diseases, demonstrating tremendous economic and societal value for New York families.
  • Kickstarting a Powerhouse Clean Energy Industry in New York: The awarded projects will spur New York's clean energy industry with $3.2 billion in combined economic impacts to upstate, downstate, and Long Island, more than $85 million investments in long-term port facilities and cutting-edge technologies and are expected to deliver over 1,600 direct new jobs in project development, component manufacturing, installation, and operations and maintenance. Efforts to best capitalize on the private investments in long-term port facilities and cutting-edge technologies should be considered in tandem with Governor Cuomo's $200 million state funding to unlock private capital in supporting critical port infrastructure.

Alicia Barton, President and CEO, NYSERDA said, "By every measure, New York's first offshore wind procurement was a resounding success and the execution of contracts today (10/23) signifies a major milestone in our nation-leading pursuit to deliver clean, locally-produced power to millions of New York homes and businesses. These projects, which represent the largest ever renewable energy procurement made by a state in U.S. history, will deliver tremendous economic benefits and provide jobs to thousands of New Yorkers."

Source: New York State Energy Research and Development Authority
Image: Die drei südlichen Alpha-Ventus-Windmühlen mit der Umspannstation. Author: SteKrueße. License