Equinor, BP Seek 54% Hike in US Offshore Wind Power Price, Filings Show

Credit: esbobeldijk/AdobeStock
Credit: esbobeldijk/AdobeStock

Norway's Equinor and its partner BP are seeking a 54% increase for the price of power produced at three planned offshore U.S. wind farms, according to a filing made by a New York state regulatory authority. 

The two partners in recent years won the rights to build the Empire Wind 1, Empire Wind 2, and Beacon Wind wind farms off the New York coast, which have a combined capacity of 3,300 megawatts, capable of powering millions of homes. 

However, in a petition filed with the New York State Public Service Commission in June this year, they requested enhanced offshore renewable energy credits compared with the terms originally agreed. 

"Application of Empire/Beacon's request would result in a 54% increase on average across its portfolio of projects," a document filed by the New York State Energy Research and Development Authority (NYSERDA) now showed.

Norwegian business daily Dagens Naeringsliv first reported the figures filed to the commission. According to NYSERDA, the so-called strike price for Empire Wind 1 would rise from $118.38 per megawatt hour (MWh) to $159.64/MWh and for Empire Wind 2 from $107.50/MWh to $177.84/MWh.

 Beacon Wind would see the strike price rise from 118.00/MWh to 190.82/MWh. 

Equinor and BP argued that "rampant inflation, global supply chain disruptions, and soaring interest rates associated with the COVID-19 pandemic, the Russia-Ukraine conflict, and the increasing pace of the energy transition", drove up costs. 

Citing similar pressures, Denmark's Orsted, said on Wednesday it may book impairments of 16 billion Danish crowns ($2.3 billion) on its U.S. portfolio, sending its shares plummeting. 

Equinor has not announced any impairments for its U.S. offshore wind business. 

"Our starting point is we need a basic level of economics in the projects that we are sanctioning and that is also the case for Empire wind and Beacon Wind," an Equinor spokesperson said. 

He declined to comment on the specific price calculations published by the New York regulator. Meanwhile, a group representing New York's largest energy consumers responding to the petition, said the proposed price amendments would increase consumer costs for the three projects by $14.8 billion over a 30-year contract tenure. The group asked the commission to decline the request, arguing "there are reasons to be skeptical of the suggestion" the project may be abandoned otherwise. 

(Reuters - Reporting by Nora Buli; editing by David Evans)

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