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New York clarifies offshore wind power development approach, bidding process

New York β€” Additional clarity regarding facilitation of New York's massive 2.4 GW offshore wind development goal emerged Monday when regulators discussed the procurement process with stakeholders at a technical conference in New York.

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"Today is a really exciting day, offshore wind has been a long time coming for New York," Alicia Barton, CEO of the New York Energy Research and Development Authority, said during the webcast conference. "The details matter, we know that, and that's why we need your input and participation."

NYSERDA issued a detailed request for information Friday designed to help the agency craft a request for proposals for 800 MW of offshore wind capacity it plans to issue in the fourth quarter of 2018. The 800 MW would account for one-third of the state's 2.4-GW-by-2030 goal.

The agency clarified Monday that its bid evaluation will focus 70% on price, 20% on economic benefits and 10% on project viability. This represents a 5% increase in the project viability category compared with the offshore wind development order issued by the state's Public Service Commission July 12.

The breakdown in the order gave a 25% weighting to economic benefits and just 5% to project viability, but that has been increased to recognize that developers will likely seek to take advantage of expiring federal tax credits that will be phased out after 2019. NYSERDA WILL USE A HYBRID PROCUREMENT APPROACH

NYSERDA will purchase offshore renewable energy credits from eligible developers on behalf of the state's load-serving entities and then resell them to the LSEs for compliance with their obligations. Each LSE will be obligated to purchase the percentage of ORECs purchased by NYSERDA in a year that represents the portion of the electric energy load they serve.

Winning projects could receive a fixed as-bid OREC price throughout the 20- to 25-year contract lifetime, which would be "substantially identical" to the approach adopted by the PSC for Tier 1 of the Renewable Energy Standard, which requires LSEs to purchase renewable energy credits, according to the order.

The other half of the hybrid approach will be an Index OREC, or adjustable OREC prices that "net periodically against a reference price expressed in a market index," as described in the order. Each bidder will submit two bids, one fixed and one index. The bidder must be prepared to commit to either a fixed price or an adjustable price system if accepted, which will be determined by NYSERDA.

If NYSERDA awards a contract based on the index OREC strike price that was bid, each monthly period of the contract will have its own price calculated for the monthly period using reference energy and capacity prices.

NYSERDA will also establish a maximum acceptable bid price above which bids will be rejected. --Jared Anderson, jared.anderson@spglobal.com

--Edited by Rocco Canonica, rocco.canonica@spglobal.com