NY regulators authorize offshore wind developers to lower bids

New York will allow offshore wind developers to lower any bids submitted during a July 2022 solicitation for resources, according to a July 27 filing.

The revision to the request for proposals is intended "to ensure the most cost-effective outcome of the solicitation for ratepayers" and "the most competitive award group," the New York State Energy Research and Development Authority (NYSERDA) said about the filing on its website. Developers cannot increase their bids and must notify the agency by Aug. 24 if they plan to change them.

Analysts at Jefferies on July 28 called the addendum a "negative" for developers given "inflationary challenges facing the industry which have led to several developers halting/delaying projects" as well as seeking to terminate uneconomic power purchase agreements.

"This comes against a backdrop of high project costs, arguably requiring similarly high prices, but policymakers seem to continue to seek lower tariffs," Jefferies wrote. "We saw a similar event in Rhode Island where Ørsted A/S failed to reach a [power purchase agreement] as pricing was considered too expensive."

The agency will award bids from New York's third solicitation during the fourth quarter, according to NYSERDA.

In New York, developers of projects that already won bids in previous solicitations asked the New York State Public Service Commission in June to adjust final PPA costs for three projects under development due to inflation and interconnection delays.

Under New York's offshore wind tender program, NYSERDA agreed to purchase Offshore Wind Renewable Energy Certificates from each project at a fixed price. But those contracts can no longer viably finance the 2,400-MW Beacon Wind projects, which are being developed by BP PLC and Equinor ASA, and the 924-MW Sunrise Wind farm, a joint venture between Eversource Energy and Ørsted.

Ørsted in January wrote down its investment in Sunrise Wind by $363 million in the face of cost inflation and rapidly rising interest rates.

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