New York State as scheduled officially opened its fourth solicitation today for offshore wind projects as well as land-based renewables. It is part of the state’s efforts to accelerate its efforts in renewable energy while also seeking to reflect changes in the industry and make up for recent setbacks.
New York Governor Kathy Hochul launched a 10-Point Action Plan last month that she said included plans to overcome macroeconomic and inflationary challenges that have impacted the renewable energy sector. New York’s progress toward its goal of producing 70 percent of its energy from renewables by 2030, with 9 GW of offshore wind energy by 20235, was endangered by recent decisions. Planned projects by Ørsted, BP and Equinor petitioned state regulators to permit them to reset pricing on the power purchase agreements reflecting the financial pressures on the industry. The regulators rejected the proposals prompting the developers to threaten to walk away from their projects which represent up to 5 GW of wind energy.
The New York State Energy Research and Development Authority (NYSERDA) released the new solicitation saying it was designed to expedite the process and build on momentum for the industry. They highlighted that conditional awards include three offshore wind and 22 land-based renewable energy projects totaling 6.4 gigawatts of clean energy, enough to power 2.6 million New York homes and deliver approximately 12 percent of New York’s electricity needs once completed. New York’s first large offshore wind farm, Ørsted’s South Fork (132 MW) is expected to generate its first power in the coming days and be completed around the beginning of 2024.
The new call is open to all bidders and provides greater flexibility according to NYSERDA. It sets a minimum size of 800 MW for the proposals. The maximum size that will be considered is 1.4 GW of capacity that is not already under contract.
Critically the solicitation includes provisions for a variety of proposals, including the opportunity for projects that currently hold power contracts to participate, allowing the companies to re-bid their projects as a means of resetting the pricing. NYSERDA notes that the companies must commit to conditional termination and that the process includes an updated policy to permit the terminations. The developers that recently lost their request to NYSERDA were waiting for the release of the new process before determining their actions.
NYSERDA is also reporting that steps were taken to streamline the process compared to the previous solicitation. Beyond the increased flexibility they are also reducing the bid fees due with the proposals. As with the previous round, they are also offering the option of incorporating a price structure into the proposal that permits a one-time adjustment to reflect changes in certain price indices. NYSERDA says this will help to ensure the long-term viability of the projects.
Other provisions include a minimum U.S. iron and steel purchase requirement for all projects awarded to encourage domestic steel production. They write that this will also provide opportunities for U.S.-based steel suppliers to participate in the growing offshore wind industry. The new solicitation also adds a provision requiring proposals to understand the benefits and burdens to disadvantaged communities as well as the standing requirements for environmental mitigation, fisheries mitigation, engagement, and New York workforce plans.
Reflecting the efforts to accelerate New York’s renewable energy efforts, final proposals for the offshore wind solicitation are due by January 25, 2024, with award announcements expected to be made by the end of February 2024. The separate land-based component seeks proposals by the end of January 2024 and expects to announce results by April. The goal for the wind projects is to execute contracts by the second quarter of 2024.
