New York Finalizes Largest Offshore Wind Deal for 1.7 Gigawatts
The New York State Energy Research and Development Authority executed 25-year contracts with Equinor Wind US LLC and Sunrise Wind LLC for nearly 1.7 gigawatts of offshore wind at an average all-in development cost of $83.36 per megawatt-hour in 2018 prices, according to an Oct. 23 announcement. The agency also released a report on the state’s first large-scale offshore wind solicitation. The report notes that the prices of offshore wind renewable energy certificates, or ORECs, resulting from the process are about 40 percent less than projections in the agency’s 2018 analysis, showing that the cost of offshore wind deployment is rapidly declining. The contracts, which represent the nation’s single largest renewables procurement to date, advance New York’s goal of developing 9 gigawatts of offshore wind by 2035.
The contracts utilize an innovative “Index OREC structure,” which protects ratepayers and projects against volatility in utility bills and project revenue, respectively over the 25-year period. Under the structure, “payments rise and fall inversely to a composite average of New York’s energy and capacity market prices, which do not reflect actual project revenues,” according to NYSERDA. The expected average OREC cost is $25.14 per megawatt hour. The average bill impact for residential customers is estimated to be about $0.73 per month.
The projects are the 816-megawatt Empire Wind project proposed by Norway’s Equinor US Holdings Inc. and the 880-megawatt Sunrise Wind project, a joint venture by Denmark’s Orsted A/S and Eversource Energy. Both projects, expected to be online in 2024, would deliver $3.2 billion in new economic activity and $700 million in avoided health impact benefits.