Several offshore wind developers will likely bid in New York's fourth offshore wind solicitation by the Thursday deadline, including units of European energy firms Orsted, Equinor and BP.
The development of the U.S. offshore wind industry took a major blow last year when companies working in several states said they could no longer complete projects profitably because of rocketing construction costs, higher interest rates and supply chain snags. The problems also hit the wind industry in other countries.
The development of the industry is key to meeting both U.S. President Joe Biden and U.S. state-level clean energy targets. To prevent the projects from falling through, some state governments including New York have agreed to allow developers to rebid their projects at higher levels.
Orsted, Equinor and BP already have contracts to sell power in New York from offshore wind farms, but are expected to drop at least some of those old contracts in favor of new deals at higher power prices.
The three companies took a combined roughly $5 billion in write-downs on U.S. offshore wind projects in development because their contracts would not cover their costs.
In November 2023, New York launched the current accelerated solicitation that will allow companies to exit old contracts and re-offer projects at higher prices. Developers have until Thursday to bid their projects into the latest solicitation.
"The outcome of New York's auction will be a strong indicator of updated, higher market costs for offshore wind - and the relative willingness (or lack thereof) for states to pay a notable premium for offshore wind power," Eli Rubin, senior energy analyst at energy consulting firm EBW Analytics Group, told Reuters.
New York could name the bidders on Friday and is expected to announce winners of the solicitation in February.
Possible New York Bidders
Earlier this month, an Equinor/BP joint venture canceled an agreement to sell power to New York from their proposed 1,260-megawatt (MW) Empire Wind 2 offshore wind farm.
Other projects that already have contracts with New York that could be canceled for new higher priced contracts, include Orsted/Eversource's 924-MW Sunrise Wind and Equinor/BP's 816-MW Empire Wind 1 and 1,230-MW Beacon Wind.
Orsted said on Wednesday it would acquire Eversource's 50% of Sunriseand expects to complete the project in 2026 if the project is successful in New York's upcoming fourth solicitation.
One megawatt of offshore wind can power roughly 500 U.S. homes.
In addition, there are several other projects that do not already have contracts that companies could bid into New York's solicitation. Those include proposals by units of European energy firms Orsted, Electricite de France (EDF), Shell, Equinor, BP, EDP Energias de Portugal's EDP Renovaveis (EDPR)., ENGIE, RWE, National Grid and Iberdrola's Avangrid.
Most of the companies are working with other firms to develop projects.
New York's first offshore wind farm, Orsted/Eversource's 132-MW South Fork provided first power in December. The facility should enter full service by the end of January or early February, according to analysts at bank Mizuho.
(Reuters - Reporting by Scott DiSavino, Editing by Marguerita Choy)