New York's cancellation of three major offshore wind projects due to rising costs and abandoned turbine plans poses a significant challenge to both state and federal energy goals.
New York State Energy Research and Development Authority (NYSERDA) announced on Friday the cancellation of power contracts for three significant offshore wind projects, a decision that sends ripples through the U.S. offshore wind industry.
The cancellation impacts plans to deliver 4 gigawatts of offshore wind power, a substantial portion of New York's target of 9 gigawatts by 2035. This move comes after GE Vernova and LM Wind Power abandoned their plans for an 18-megawatt turbine, a key component in the proposed energy projects.
The now-canceled projects, Attentive Energy, Community Offshore Wind, and Excelsior Wind, were part of New York's strategy to address escalating construction and financing costs in the offshore wind sector. BloombergNEF reported a 60 percent increase in offshore wind project costs from 2021 to 2024, attributing it mostly to rising interest rates.
Provisional contracts, awarded in October, aimed to mitigate these costs by offering higher, inflation-indexed prices. However, the withdrawal of plans for the 18-megawatt turbine by turbine makers meant developers would need to install a greater number of turbines than initially planned, increasing overall project expenses beyond the scope of the contracts.
NYSERDA stated, "Given these developments, no final awards will be made," and expressed intentions to initiate future competitive solicitations.
This development represents a significant setback for President Biden's pledge to power 10 million homes with offshore wind by 2030 and New York Governor Kathy Hochul's vision of job creation and clean energy expansion through offshore wind. In response to the cancellation, Governor Hochul's spokesperson, Katy Zielinski, emphasized the commitment to continue building the offshore wind industry and ensuring competitive processes that benefit New York consumers.
GE Vernova, recently established as a separate entity specializing in renewable energy, faces implications from this announcement, as their turbine was a central element in the canceled projects. The company has yet to respond to requests for comment.
Vineyard Offshore, the developer behind Excelsior Wind, deemed the state's decision appropriate given GE Vernova's unmet commitment and expressed eagerness to collaborate with New York authorities on future solicitations.
The cancellation adds to New York's challenges with offshore wind projects, including cost-related delays and supply chain difficulties. For example, Equinor's Empire Wind project had to revise plans to import towers instead of using those produced in the port of Albany due to a surge in construction costs.
As of now, only two projects are proceeding in New York: Empire Wind 1 (810 MW) and Sunrise Wind (880 MW). Additionally, the state recently celebrated the completion of South Fork Wind, New York's first offshore wind project with a capacity of 130 MW.
