New York selected Equinor and an Orsted-led joint venture to supply 1.7GW of capacity in the state’s highly-anticipated first offshore wind power solicitation that requires winning projects to be online by the end of 2024.
Equinor and Sunrise Wind, a 50-50 partnership between Orsted and Eversource, the largest energy company in New England, can now negotiate 25-year deals for their facilities, with capacities of 816MW and 880MW, respectively.
The 1.7GW is the first slice of the state's goal to have 9GW of offshore wind in place by 2035, and a major step toward meeting New York's 70% renewables mandate for the end of this decade.
"With this agreement, New York will lead the way in developing the largest source of offshore wind power in the nation," Governor Andrew Cuomo said at a ceremony in which he signed a landmark climate bill that requires the state to achieve a carbon free electricity system by 2040 and reduce greenhouse gas emissions 85% below 1990 levels by 2050.
New York will lead the way in developing the largest source of offshore wind power in the nation.
He said the projects will generate $3.2bn in economic activity.
The developers will sign offshore wind renewable energy certificate (OREC) agreements with the state. The New York State Energy and Research Development Authority (NYSERDA), which oversees the offshore wind tender process, will buy ORECs from the developers – guaranteeing a revenue stream for electricity sold and allowing projects to secure financing – and resell them to load-serving entities to meet their obligations under the state's offshore wind standard.
Anthony Logan, senior analyst, North American Wind Power at Wood Mackenzie, said: “New York had a significant need for new renewable generation to serve both Long Island and New York City, and rather than attempt to award each in subsequent solicitations, they made a massive bet on the capacity of this very nascent sector to build two projects simultaneously.
“This was more than twice the capacity indicated by the Public Service Commission beforehand, and more than the 1.1GW awarded by New Jersey just weeks ago, which had previously been considered an eye-popping figure for the US market when their auction was first announced,” Logan added.
Losing bidders were Liberty Wind, owned jointly by Avangrid and Copenhagen Infrastructure Partners of Denmark, and Atlantic Shores Offshore Wind, a joint venture comprising EDF Renewables and Shell New Energies.
Equinor’s project, called Empire Wind, will be located in a 323 sq km (80,000 acre) zone about 22-56km (14-35 miles) south of Long Island where it won commercial development rights two years ago.
The New York Bight region containing the area is an Atlantic Ocean coastal indentation southeast and southwest of New York City whose features include the Hudson River estuary.
In his prepared remarks, Cuomo said Empire Wind would "feed" New York City.
The Norweigan company envisions employing 60 to 80 turbines of "at least 10MW" for a total $3bn investment in a project able to provide electric power for more than 500,000 homes.
"Being selected in this highly competitive field of bidders shows the confidence that New York leadership has in Equinor's capabilities of developing large offshore energy projects," said Christer af Geijerstam, president of Equinor Wind US, in a statement.
Equinor will also invest more than $60m in port upgrades in New York that will support future offshore wind projects and further "strengthen the state's position as the US hub for offshore wind," it said.
The Sunrise Wind project site is off the coasts of Massachusetts and Rhode Island, about 77km from Montauk Point on Long Island, which the project would serve, according to Cuomo.
The project will be adjacent to Orsted's 704MW Revolution Wind that will deliver electric power to Rhode Island (400MW) and neighbouring Connecticut (304MW) starting in 2023, and the 130MW South Fork to serve Long Island from 2022.
By taking a portfolio approach, Orsted and Eversource said they will be able to leverage "significant procurement synergies" and optimise construction and operation.
As an example, they awarded Siemens Gamesa a 1.7GW conditional contract to supply all three with SG 8.0-167 turbines that are covered by service agreements.
As part of its winning proposal, Sunrise Wind will bring economic development by constructing an operations and maintenance hub and 100 related new full-time jobs in Port Jefferson, Long Island, and invest in additional port infrastructure upgrades and establishing offshore wind training programs in the state of New York.
The Sunrise Wind partners also pledged to create more than 900 jobs annually through development, construction and initial operation, and invest $10m to create a National Workforce Training Center in partnership with Suffolk County Community College and leading labor unions.
Furthermore, Sunrise Wind is exploring transmission partnerships with the New York Power Authority (NYPA) and Con Edison, the utility serving New York City.
Reaction from stakeholders
Industry and renewable energy groups loudly praised Cuomo and his administration for their leadership in advancing offshore wind development and taking climate-change action.
"New York is walking the walk when it comes to renewable energy and climate leadership in America. We applaud Governor Cuomo for signing this historic legislation to reduce greenhouse emissions and transition the state to a renewable energy economy," said Greg Wetstone, chief executive of the American Council on Renewable Energy (ACORE).
“Governor Cuomo’s vision to power the Empire State with clean, American-made offshore wind power will benefit all New Yorkers,” said Laura Morton Smith, senior director, policy and regulatory affairs, at the American Wind Energy Association (AWEA).
Liz Burdock, chief executive of the Business Network for Offshore Wind (BNOW), said at Cuomo's direction, New York is now "leading the race" to develop offshore wind and its residents will reap the economic and environmental benefits. BNOW, a non-profit, is working to develop a US supply chain for the sector.
Joe Martens, director of the New York Offshore Wind Alliance, an advocacy group based in the capital Albany, called Cuomo's actions "an epic milestone in New York’s tradition of environmental leadership."
“Today, New York State truly kick-started the US offshore wind industry,” said Stephanie McLellan, director of the Rockefeller Brothers Fund-financed Special Initiative on Offshore Wind.
This is the moment that US offshore wind has waited for.
“They did so by codifying a large, long term offshore wind market; awarding New York projects large enough to — combined with what is already in the pipeline in other east coast states — drive the business case for supply chain investment decisions; and committing to investing in a qualified workforce and ports and service facilities necessary in order to build out large amounts of offshore wind.
“This is the moment that US offshore wind has waited for, and needed, to get over the hump.”
On the opposite side was Robert Bryce, a senior fellow at the Manhattan Institute, a conservative, free market think tank, who wrote earlier this year that offshore wind is expensive and expressed doubts all 9GW will get built.
He argued unanswered questions remain such as where the transmission lines for the power will come onshore and how the new industry will co-exist with commercial fishing and maritime interests that heavily utilise the same waters.