Equinor and BP announce a “reset” of Empire Wind 2

Molly Morris, president of Equinor Renewables Americas, "We're fready to go to work"

Back in November 2023, the New York State Public Service Commission denied petitions submitted by Empire Offshore Wind, Beacon Wind, Sunrise Wind and the Alliance for Clean Energy New York, Inc. (ACENY) that sought to address inflationary pressures impacting project economics through adjustments to Renewable Energy Credit (REC) and Offshore Wind REC (OREC) purchase and sales agreements entered with the New York State Energy Research and Development Authority (NYSERDA).

That was seen as putting some existing projects at risk and, yesterday, Equinor and BP reported that they had reached an agreement with NYSERDA to terminate the OREC agreement for the Empire Wind 2 offshore wind project with a potential generative capacity of 1,260 MW.

Equinor and BP said the step “reflects changed economic circumstances on an industry-wide scale and repositions an already mature project to continue development in anticipation of new offtake opportunities. The decision recognizes commercial conditions driven by inflation, interest rates and supply chain disruptions that prevented Empire Wind 2’s existing OREC agreement from being viable.”

They gave no clarity on what they meant by “alternative offtake opportunities.”

Equinor and BP say that they believe offshore wind can be an important part of the energy mix and are committed to maintaining substantial contributions to the state and local economy.

“Commercial viability is fundamental for ambitious projects of this size and scale. The Empire Wind 2 decision provides the opportunity to reset and develop a stronger and more robust project going forward,” said Molly Morris, president of Equinor Renewables Americas. “We will continue to closely engage our many community partners across the state. As evidenced by the progress at the South Brooklyn Marine Terminal, our offshore wind activity is ready to generate union jobs and significant economic activity in New York.”

“BP is supportive of NYSERDA’s leadership and commitment to offshore wind, which we believe is a critical part of New York State’s and America’s clean energy future,” said Joshua Weinstein, BP’s president of offshore wind, Americas. “Offshore wind can deliver reliable renewable power as well as economic benefits to the state and its communities.”

The Empire Wind 1 and Empire Wind 2 projects recently reached a key federal permitting milestone, having received the federal Record of Decision from BOEM; last month, Empire Wind 1 also received its Article VII Certificate of Environmental Compatibility and Public Need in New York.

SEATRIUM CONTRACT CANCELED

One supplier hit by the “reset” decision is Singapore’s Seatrium. It had been awarded two contracts from Empire Offshore Wind for the engineering, procurement, construction, offshore hook-up, and commissioning of two offshore substation (OSS) platforms for the Empire Wind 1 and 2 offshore wind farms.

Seatrium says that it has now been informed by Empire Offshore Wind LLC that “as a result of the significant macroeconomic conditions impacting the Empire Wind 2 project,” it has decided to cancel the contract for the 1,260MW Empire Wind 2 OSS platform, valued at more than SGD 250 million (about US$188 million).

Construction work on the Empire Wind 2 OSS Platform had been expected to commence only in June 2024, with minimal engineering work performed. Seatrium says that it will avail construction capacity set aside for this project to other projects in the pipeline. The contract is structured on progressive payment milestones, and payment for the work performed to date has been received, resulting in neutral project cashflow.

Seatrium says that construction work on the 810 MW Empire Wind 1 OSS platform commenced in fourth quarter 2023 and that Empire Offshore Wind LLC has confirmed that the Empire Wind 1 project contract remains unaffected and continues as planned.