Ørsted and Equinor bid into NY4 offshore wind solicitation

Image: BP

Efforts to get New York offshore wind back on track continue. Following New York State’s successful third offshore wind solicitation, both Ørsted and Equinor have bid into New York’s fourth offshore wind solicitation (NY4), with some familiar projects being resubmitted — and some changing of partners is going on.

The stage for NY4 was set back in November 2023 when the New York State Public Service Commission denied petitions submitted by offshore wind developers that sought to address inflationary pressures impacting project economics through adjustments Offshore Wind REC (OREC) purchase and sales agreements. That was seen as putting some existing projects at risk and evidently there are hopes that NY4 will produce some more realistic pricing.

Ørsted and its joint venture partner Eversource yesterday submitted a new proposal for Sunrise Wind, re-bidding an updated project that, if selected, they say “would fulfill its promise to deliver substantial economic benefits across New York and play a critical role in advancing the state’s climate goals by delivering up to 924 megawatts of clean energy to New York.

“As the most mature offshore wind project in the state’s pipeline,” the companies said, “Sunrise Wind is expected to be completed in 2026, helping the state achieve its mandate of 70% renewable energy by 2030, while paving the way for future state projects and accelerating the state’s growing offshore wind workforce and supply chain.”

In advancing the re-bid for Sunrise Wind, the joint venture reached an agreement for Ørsted to acquire Eversource’s 50% share in the project if it is awarded a contract in NY4. In a successful re-bid, Ørsted would become the sole owner of Sunrise Wind, while Eversource would remain contracted to lead the project’s onshore construction. Should Sunrise Wind be successful in the re-bid, Ørsted would pay 50% of the negotiated purchase price upon closing the sales transaction, with the remaining 50% paid when onshore construction is completed and certain other milestones are achieved. If the project is not selected, the existing contract for Sunrise Wind would be cancelled, per the state’s requirement, and the 50/50 joint venture will remain in place. Ørsted and Eversource would then assess their options in determining the best path forward for Sunrise Wind and its assets.

EQUINOR BIDS “SHOVEL READY” PROJECT

Equinor said today that the Empire Wind 1 project has bid into NY4 and that, if awarded a contract is expected to provide first power in 2026.

Already several years into development, says Equinor, “Empire Wind 1 will anchor the East Coast offshore wind industry in New York City through the transformation of the South Brooklyn Marine Terminal (SBMT) into a world-class hub for offshore wind.”

“Empire Wind 1 is ready and so is Equinor,” said Molly Morris, president of Equinor Renewables Americas. “New York has demonstrated its commitment to offshore wind and this project will play a foundational role in driving that commitment forward. Empire Wind 1 puts New York City at the heart of this new industry and the economic and environmental benefits will extend throughout the state. We continue to engage closely with our key stakeholders – including community partners, union labor, and environmental organizations – and are grateful for the support the project is receiving.”

Here again, some changing of partners is going on. Yesterday, Equinor and BP announced a swap transaction that, subject to certain conditions and regulatory approval, would see Equinor full ownership of the Empire Wind lease and associated projects, including SBMT, where construction is expected to begin in the first half of this year, while BP would take take full ownership of Beacon Wind and its assets. A mutual termination agreement has also been reached with the NYSERDA for the Beacon Wind 1 Offshore Wind Renewable Energy Certificate (OREC) Purchase and Sale Agreement.

BP said the proposed swap transaction is expected to be on a cash neutral basis subject to customary working capital adjustments. Following assessment of fair value of BP’s assets, the company expects to recognize a pre-tax impairment charge of around $0.6 billion relating to its U.S. offshore wind assets in fourth quarter 2023. BP says it remains committed to U.S. offshore wind.

“Beacon Wind 1 and 2 have immense potential to create American jobs, benefit local communities, deliver low carbon energy and support the energy transition,” said Joshua Weinstein, BP’s president of offshore wind Americas. “BP has a proven track record of delivering complex engineering projects offshore, and we’ll continue bringing that expertise to bear as we advance the development, engage with communities and bring these projects closer to commercial operations.”