New York State will issue a new offshore wind solicitation on Nov. 30 with bids due in January 2024, the state government said, in a move that should support the troubled industry.
European energy companies Orsted (ORSTED.CO), Equinor (EQNR.OL) and BP (BP.L) have taken a combined $5 billion of writedowns on U.S. offshore wind projects that are not even completed, in part because their existing power sales contracts would not cover the cost of building and financing the projects.
That is because soaring inflation, rising interest rates and supply chain problems have led to much higher costs than anticipated.
The new solicitation will be open to all bidders, including those with existing contracts. This would allow the companies to re-offer their planned projects at higher prices and exit their old contracts.
The companies had warned they could cancel the power sales contracts after failing to convince the New York Public Service Commission (NYPSC), the state's utility regulator, to renegotiate the old contracts at higher prices.
In response to the NYPSC's decision, New York Governor Hochul announced on Oct. 12 a 10-point plan to help renewable energy firms "overcome recent macroeconomic and inflationary challenges that have impacted the renewable energy sector."
Those measures included the expedited solicitation for offshore wind and other renewable projects announced on Thursday.
The offshore wind projects that the companies are developing are Orsted's 924-megawatt (MW) Sunrise, and the joint venture between Equinor and BP's 816-MW Empire Wind 1, 1,260-MW Empire Wind 2 and 1,230-MW Beacon Wind.
In a positive sign for the companies, the New York State Energy Research and Development Authority (NYSERDA) on Oct. 24 awarded three offshore wind contracts at much higher prices than the earlier projects bid by Orsted, BP and Equinor.
