BP and Equinor bin New York wind farm as surging costs derail yet another green energy project
BP and Equinor have cancelled a deal to sell energy from an inflation-hampered, un-built offshore wind farm off the coast of New York that would have supplied the city with clean, green energy.
According to the statement released yesterday, the European energy giants had agreed to sell renewable energy credits from the 1,260MW Empire Wind 2 phase of the project at a strike price of $107.50 a megawatt-hour (MWh).
However, the companies said US authorities agreed that they could reset the deal, signed in 2022, “in anticipation of new offtake opportunities.”
Molly Morris, president of Equinor Renewables Americas said: “Commercial viability is fundamental for ambitious projects of this size and scale and the Empire Wind 2 decision provides the opportunity to reset and develop a stronger and more robust project going forward.”
BP’s president of Offshore Wind Americas, Joshua Weinstein, added: “BP is supportive of New York State Energy Research and Development Authority’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.”
The initial agreement involved developing the 147-turbine, 80,000-acre Empire Wind site around 15 miles south of Long Island, with the resulting power being sold at a strike price of $107.50 MWh.
Through a petition to the New York utilities regulator early in 2023, the companies had tried to up this pricing to around $177.84 MWh to account for inflation and interest rate hikes as well as supply chain woes – this request was denied.
A separate New York energy agency then confirmed that bids for the new strike price would be open to all potential project developers, including BP and Equinor, until January 25th with the winners expected to be announced next month.
With just two offshore wind farms operating in the US, a separate regulatory system in each state and an underdeveloped supply chain, surging costs are proving to be yet another headwind for the country’s shift away from fossil fuels.
While the president’s Inflation Reduction Act has created a clean energy job and investment boom raging inflation has hamstrung clean energy projects.
Danish sector leader Ørsted suspended the development of the Ocean Wind 1 and 2 projects off the coast of New Jersey.
The projects had a combined capacity of 2.25GW – enough to power over a million homes.