New York state regulators rejected a request by offshore wind developers to renegotiate contracts with utility companies, marking a major blow to the industry on Thursday, E&E News reported.
The New York Public Services Commission (NYPSC) rejected requests by Orsted and Equinor-BP’s joint ventures to increase the prices the companies would receive from utility companies for offshore-wind generated power in the future in order to offset inflation, according to E&E News. The developers had requested more favorable terms for their projects as inflation, higher interest rates, and supply chain and logistical issues have eaten into their profit margins, trends that are troubling the entire offshore wind industry beyond New York state.
Had the petitioned requests been granted, ratepayers in the state could have been forced to pay more for their power as utility companies passed along the higher prices sought by the developers to cover their own costs, according to E&E News. Equinor and BP had requested a 54% price increase for their developments, while Orsted requested a 27% boost. (RELATED: Watchdog To Open Probe Into Offshore Wind Projects As Whale Deaths Pile Up)
Not much interest in the offshore wind leaseshttps://t.co/EeKTqG90vw
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“Today’s decision by the Public Service Commission was necessary to maintain affordability in the wake of global economic pressures and to preserve the competitive process that ensures New York consumers are getting the best deal,” Democratic New York Gov. Kathy Hochul said of the rejection, according to E&E News.
The rejection may threaten the viability of some offshore wind developments slated to provide green energy to the state, like Orsted’s Sunrise Wind project. The rejection might also spell trouble for New York’s goals of having its power sector reach 70% green energy generation by 2030 and net-zero emissions by 2040.
“Equinor and BP are disappointed at the New York Public Service Commission’s rejection of Empire Wind and Beacon Wind’s petition for support to help offset the unforeseen challenges facing our industry today stemming from inflation, supply chain disruptions and high interest rates,” Molly Morris, president of Equinor Renewables Americas, said of the rejection. “At the same time, these projects must be financially sustainable to proceed. Equinor and BP will assess the impact of the State’s decision on these projects.”
Offshore wind is a lynchpin of the Biden administration’s sweeping climate agenda. The White House is aiming to have offshore wind provide enough energy to power 10 million American homes by 2030 as part of its push to have the entire U.S. power grid reach net-zero by 2035.
“We are disappointed in the PSC’s decision today,” David Hardy, CEO of Americas at Orsted, said of the rejection. “The timely development of Sunrise Wind is critical to meeting the state’s 2030 clean energy targets. We believe making available the same inflation-related mechanisms offered to recent offshore wind projects is a reasonable solution for addressing the unprecedented macroeconomic factors challenging first-wave offshore wind farms while also keeping New York’s climate goals within reach,” he continued, adding that “we are reviewing the PSC’s order, but Sunrise Wind’s viability and therefore ability to be constructed are extremely challenged without this adjustment.”
Neither the White House nor Hochul’s office responded immediately to requests for comment.
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