The US state of New York has selected Equinor to supply almost 2.5GW of power from two projects in its highly-anticipated second offshore wind solicitation, with the Norwegian energy giant winning a bid which includes large-scale port redevelopment that will position the state as a hub for the fast-emerging sector in the region.
Equinor – which will take over the top slot in power capacity under contract from Denmark’s Orsted with the award until its recently agreed strategic partnership BP is formalised in the coming month – will dovetail 1.26GW of production capacity from the Empire Wind 2 array, planned for a lease area south of Long Island, and 1.23GW from the Beacon Hill 1 project sited off the southern coast of Massachusetts.
The losing bidders were the 50-50 Orsted-Eversource joint venture and Vineyard Wind, owned equally by Avangrid Renewables and Copenhagen Infrastructure Partners (CIP).
Making the announcement, New York Governor Andrew Cuomo, who has pledged to have the state build up to 1GW of offshore wind a year to 2030, said in this week’s State of the State address: “Green energy is a pressing moral imperative and a prime economic opportunity. New York can and will be the nation's leader for renewable energy innovation and production, all while securing jobs of the future for New Yorkers.
“Our entire green energy programme will create a total 12.4GW of green energy to power 6 million homes, directly create more than 50,000 jobs, and spur $29bn in private investment all across the state.
“We are proposing the largest wind programmes in the nation and advancing our green manufacturing capacity and the jobs that go with it,” said Cuomo.
The two vast arrays will each be built around 90 turbines, with Empire Wind 2 exporting electricity a short distance to a substation in Oceanside, Long Island, while deliveries from Beacon Hill 1 will travel 200 miles (321 km) under the Long Island Sound to a substation in Astoria, Queens.
The Norwegian group will now negotiate a purchase and sale agreement with the New York State Energy Research and Development Authority (Nyserda) which oversees the state’s offshore wind procurement programme.
Nyserda purchases offshore renewable energy credits (ORECs) from project developers as electricity is delivered to the grid, giving them long-term off-take and the ability to arrange financing. Each OREC represents the positive environmental attributes associated with 1 MWh of power generated and consumed by retail customers in the state.
The proposed OREC price is an important consideration when Nyserda evaluates bids from developers. The agency will sell ORECs to utilities and other load-serving entities, who are required to purchase clean energy credits to meet New York's 70% renewable goal by 2030.
The award is a huge win for Equinor giving it 3.3GW of eventual contracted off-take, the most of any project developer in the US at this early stage in the industry's evolution and three times what Orsted and Eversource Energy has in the nation’s biggest offshore wind play.
BP through a $1.1bn investment has a half interest in Beacon Hill 1 and Empire Wind 2 and so will overnight become a leading player here in an industry set for dramatic growth under President-elect Joe Biden, who takes office next week. Equinor said both companies expect to close their transaction early this year.
“The successful bids for Empire Wind 2 and Beacon Wind 1 represent a game-changer for our offshore wind business in the US and underline Equinor’s commitment to be a leading company in the energy transition,” said Equinor CEO Anders Opedal.
Nyserda in July 2019 chose Equinor’s 816MW Empire 1 project as a winner in the state’s first solicitation with 880MW going to Orsted-Eversource. Cuomo's administration has now awarded about 4.2GW offshore wind capacity through Nyserda while Long Island Power Authority has contracted 130MW from the South Fork project owned by Orsted-Eversource.
The successful bids represent a game-changer for our offshore wind business in the US.
The state goal is to have 9GW in place by 2035. States along the east coast have made commitments so far to procure 29GW by that date.
On completion, Cuomo said Beacon Hill 1 and Empire State 2 would “bring another $8.9bn in investment and create more than 5,200 jobs”. Equinor did not confirm those numbers.
Joseph Martens, director of industry advocacy group the New York Offshore Wind Alliance said: “At a time when bold action is needed to rebuild our state’s economy and combat the climate crisis, Governor Cuomo took a quantum leap forward today to help meet these historic challenges.
“Offshore wind energy further supports the tireless efforts of a broad-based coalition of political leaders, environmental and labor organisations, developers and communities across the state to cement New York as the epicenter of this new and growing industry to the US.”
Ports crucial
A key element of Equinor's winning bid is development of facilities at two ports: South Brooklyn Marine Terminal and the Port of Albany, 157 miles north along the Hudson River.
The developer said it will partner with the state to transform a 73-acre (29 hectare) tract at the South Brooklyn Marine Terminal into a facility to stage and assemble offshore wind projects, an upgrade that is expected to create 1,200 jobs. The goal is to have it in operation as early as 2024.
At the Port of Albany, Equinor said it would “combine forces” with contractors Marmen and Welcon “to help the port become America’s first offshore wind tower and transition piece manufacturing facility”, where it will manufacture components for the three projects that will supply power to New York and others as the industry “continues to grow along the east coast”.
Cuomo said the future facility will have capacity to manufacture 150 towers per year. The project will create 500 construction jobs and will employ 300 full-time workers. Plans call for operation in 2023.
After Nyserda completes the purchase and sale agreement for the wind farms with Equinor and files them with the Public Service Commission, it will make public the investment breakdowns for projects at both those ports, an agency spokesperson told Recharge.
The Port of Coeymans, located 15 miles south of the Port of Albany, will become a manufacturing site for “cutting-edge” offshore wind turbine foundations, noted Cuomo, who gave no details beyond that his administration had “secured commitments” from unnamed companies to invest there.
Equinor told Recharge last year that the port was its preferred site for production of gravity base foundations (GBFs) for the Empire Wind 1 array. In its winning bid, the company proposed the port property also be used for the same purpose for Beacon Hill I and Empire Wind 2.
The GBFs would be floated out to the installation site before being sunk in 20-40 metres of waters to the ocean floor, where their sheer weight will anchor them to the seabed, a method pioneered in offshore oil & gas that removes the need for expensive heavy-lift installation vessels and the hydraulic hammers required to pile-in monopile or steel jacket foundations.
Cuomo said the three port projects will leverage almost $3 of private funding for every $1 of public funding, for a combined $644m investment in the new facilities. It was not immediately clear if this investment is part of the $8.9bn he cited for the two wind farms.
Raised ambition
Nyserda and the State University of New York (Suny) launched have launched an initiative to train 2,500 workers for work in the emerging offshore wind sector, calling it the “largest public investment in offshore wind workforce development by any state in the US”.
Doreen Harris, Nyserda’s CEO, said , “Governor Cuomo has taken the necessary actions to position New York as a national hub for the US offshore wind industry, serving as a catalyst to attract significant private investments in the state and create thousands of well-paying jobs.
“This initiative will deliver opportunities across the state to prepare and train New Yorkers to work on the state’s first and future offshore wind projects as well as to provide a pipeline of talent for other offshore wind projects in the US.”
Separately, the state will expand other renewable energy development and usage over the next several years. This includes contracts for 24 new solar projects – 22 are with Nyserda and two with the New York Power Authority – totaling about 2.2GW capacity.
New York will also open a competitive bidding process to build an onshore “green transmission grid” that will carry clean energy to areas that are transitioning away from fossil generation. At least three projects are planned, including a 330-mile link that would supply New York City.
Clean energy supporters were effusive in their praise of Cuomo and New York State.
“Today’s announcement continues the offshore wind industry’s strong growth trends that is being driven by bold state leadership. We applaud Governor Cuomo for his commitment to creating thousands of new jobs and providing clean renewable energy to hundreds of thousands of New York homes," said Ross Gould, vice president for supply chain development and New York state director at the Business Network for Offshore Wind, an advocacy group based in Baltimore.
“New York is smart to recognise that clean energy is a sector poised for growth and ready to help New York’s economy recover from Covid. The renewable energy industry appreciates the support and vision of Governor Cuomo and is proud to be part of New York’s recovery,” said Anne Reynolds, executive director of the Alliance for Clean Energy in Albany.
Democratic lawmakers in the House of Representatives introduced climate legislation last October that included setting America's first national offshore wind goals of 12.5GW in federal waters by 2025 and 25GW by 2030, and would extend leasing and development activities to US territories.