trending Market Intelligence /marketintelligence/en/news-insights/trending/D470nHeevmW96mODsmzCJA2 content esgSubNav
In This List

New York finalizes contracts for 2 offshore wind projects; report touts results

Blog

Insight Weekly: Earnings learnings; Duke Energy hits back; PE activity surges

Blog

Q&A: Data That Delivers - Automating the Credit Risk Workflow

Blog

Insight Weekly: Banks' efficiency push; vacuuming carbon; Big Pharma diversity goals

Blog

Smart thermostats gain traction in US, point to modest electricity savings


New York finalizes contracts for 2 offshore wind projects; report touts results

New York finalized contracts with two offshore wind projects to deliver nearly 1,700 MW of capacity in the largest procurement of offshore wind in U.S. history. A report documenting the results of that procurement was also released.

Gov. Andrew Cuomo announced Oct. 23 that the New York State Energy Research and Development Authority, or NYSERDA, finalized contracts with Equinor Wind US LLC's 816-MW Boardwalk Offshore Wind (Empire Wind) (Rockaway Peninsula) project and Sunrise Wind LLC's 880-MW Sunrise Wind Offshore Farm.

Both offshore wind projects, slated to be in service by the end of 2024, were selected in July as winning bids of a solicitation initiated in November 2018. The projects advance Cuomo's Green New Deal goal of developing 9,000 MW of offshore wind for New York by 2035.

The Empire Wind project will be located 15 to 30 miles southeast of Long Island and will connect to Consolidated Edison Inc. subsidiary Consolidated Edison Co. of New York Inc.'s Gowanus substation in Brooklyn to supply power to New York City.

The Sunrise Wind project, a joint venture between Denmark-based Ørsted A/S and Eversource Energy, will be located 30 miles east of Long Island's Montauk Point. ConEd subsidiary Con Edison Transmission Inc. and the state-owned New York Power Authority have agreed to a memorandum of understanding to work on a transmission component of the project.

NYSERDA timed the contract finalizations with the submission of its comprehensive report, "Launching New York's Offshore Wind Industry: Phase 1 Report," to the New York State Department of Public Service. The report details the results of New York's first large-scale offshore wind solicitation.

The report documents how the solicitation resulted in Offshore Wind Renewable Energy Certificate, or OREC, prices approximately 40% lower than expected. ORECs put a quantifiable price on the environmental benefits of 1 MWh of electricity generated by offshore wind resources and, in turn, compensate offshore wind generators for their investments.

In a news release, the Cuomo administration stressed that the significantly lower-than-expected OREC prices signal that the costs to deploy offshore wind are rapidly declining. The administration said the Empire and Sunrise offshore wind projects are "priced competitively" relative to recent offshore wind procurement results in New Jersey and New England states.

Among its key findings, the NYSERDA report found that the solicitation spurred the most competitive market response to date among all U.S. state offshore wind solicitations, with four developers submitting a total of 18 bids for projects spanning the coasts of New Jersey, New York, and the New England region.

NYSERDA also found the procurement to be cost-effective, with the Empire Wind and Sunrise Wind projects averaging an all-in development cost of $83.36/MWh, in 2018 dollars, with an expected average OREC cost of $25.14/MWh. According to NYSERDA, the average bill impact for residential customers will be approximately $0.73 per month per customer.

"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," the report explained. "This structure provides protection for ratepayers against volatility in utility bills and projects in project revenue over the contracts' 25-year lifetime."

The Empire Wind and Sunrise Wind projects are expected to deliver $3.2 billion in combined economic activity through private investments in labor, supplies and development and to deliver more than $85 million in investments in long-term port facilities, infrastructure and technologies, according to NYSERDA. Those benefits are in tandem with $200 million in state funding that aims to unlock private capital investments in supporting critical port infrastructure.

The state further expects the Empire Wind and Sunrise Wind projects to deliver over 1,600 direct new jobs in project development, component manufacturing, installation, and operations and maintenance.

Finally, NYSERDA estimated that emissions-free electricity generated by the two offshore wind projects will deliver 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.

Equinor Wind US is a subsidiary of Norway's Equinor ASA.