Big turnout expected in New York offshore wind power auction

Avangrid

25/01/2024 11:00

By Scott DiSavino
       Jan 25 (Reuters) - Several offshore wind developers will
likely bid in New York's fourth offshore wind solicitation by
the Thursday deadline, including units of European energy firms
Orsted  ORSTED.CO , Equinor  EQNR.N  and BP  BP.L .
    The development of the U.S. offshore wind industry took a
major blow last year when companies working in several states
said they could no longer complete projects profitably because
of rocketing construction costs, higher interest rates and
supply chain snags. The problems also hit the wind industry in
other countries.
    The development of the industry is key to meeting both U.S.
President Joe Biden and U.S. state-level clean energy targets.
To prevent the projects from falling through, some state
governments including New York have agreed to allow developers
to rebid their projects at higher levels. 
    Orsted, Equinor and BP already have contracts to sell power
in New York from offshore wind farms, but are expected to drop
at least some of those old contracts in favor of new deals at
higher power prices.
    The three companies took a combined roughly $5 billion in
writedowns on U.S. offshore wind projects in development because
their contracts would not cover their costs.
    In November 2023, New York launched the current accelerated
solicitation that will allow companies to exit old contracts and
re-offer projects at higher prices. Developers have until
Thursday to bid their projects into the latest solicitation.
    "The outcome of New York's auction will be a strong
indicator of updated, higher market costs for offshore wind -
and the relative willingness (or lack thereof) for states to pay
a notable premium for offshore wind power," Eli Rubin, senior
energy analyst at energy consulting firm EBW Analytics Group,
told Reuters.
    New York could name the bidders on Friday and is expected to
announce winners of the solicitation in February.
        
    POSSIBLE NEW YORK BIDDERS
    Earlier this month, an Equinor/BP joint venture canceled an
agreement to sell power to New York from their proposed
1,260-megawatt (MW) Empire Wind 2 offshore wind farm.
    Other projects that already have contracts with New York
that could be canceled for new higher priced contracts, include
Orsted/Eversource's  ES.N  924-MW Sunrise Wind and Equinor/BP's
816-MW Empire Wind 1 and 1,230-MW Beacon Wind.
    Orsted said on Wednesday it would acquire Eversource's 50%
of Sunrise and expects to complete the project in 2026 if the
project is successful in New York's upcoming fourth
solicitation.
    One megawatt of offshore wind can power roughly 500 U.S.
homes.
    In addition, there are several other projects that do not
already have contracts that companies could bid into New York's
solicitation. Those include proposals by units of European
energy firms Orsted, Electricite de France (EDF), Shell
 SHEL.L , Equinor, BP, EDP Energias de Portugal's  EDP.LS  EDP
Renovaveis  EDPR.LS , ENGIE  ENGIE.PA , RWE  RWEG.DE , National
Grid  NG.L  and Iberdrola's  IBE.MC  Avangrid  AGR.N .
    Most of the companies are working with other firms to
develop projects.
    New York's first offshore wind farm, Orsted/Eversource's
132-MW South Fork provided first power in December. The facility
should enter full service by the end of January or early
February, according to analysts at bank Mizuho.

 (Reporting by Scott DiSavino
Editing by Marguerita Choy)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters
Messaging: scott.disavino.thomsonreuters.com@reuters.net))