Developers within the U.S. offshore wind business will doubtless cancel some energy gross sales contracts in New York after the state final week denied passing on extra of the prices to shoppers, however main tasks off Massachusetts and Rhode Island are set to start out up later this 12 months.
Several states and U.S. President Joe Biden’s administration take into account offshore wind to be a key a part of their plans to transition away from fossil fuels for vitality, create jobs and scale back carbon dioxide emissions.
Last week, New York utility regulators dealt the business a extreme blow by denying requests to extend the amount of cash New Yorkers must pay beneath current contracts for energy to be produced at 4 offshore wind tasks beneath growth.
The wind builders, together with models of European vitality corporations Orsted, Equinor and BP, requested these will increase to cowl rising labor and gear prices as a result of hovering inflation and better financing prices from rate of interest hikes.
The corporations stated they’re reviewing the New York resolution earlier than taking subsequent steps on their tasks, together with Orsted’s 924-megawatt (MW) Sunrise Wind, and Equinor/BP’s 816-MW Empire Wind 1, 1,260-MW Empire Wind 2 and 1,230-MW Beacon Wind.
“Contract disputes are near-term risks for some projects and state renewable energy goals,” Timothy Fox, VP at analysis agency ClearView Energy Partners, informed Reuters. “In the long run, however, we still think offshore wind will be a major producer of power … it’s just on a longer and flatter trajectory than first envisioned by the states and the Biden administration.”
Future offshore wind bids are anticipated to include climbing prices for tasks, stated Eli Rubin, senior vitality analyst at vitality consulting agency EBW Analytics Group.
“States will likely have to either approve sharply higher consumer rates or find another pathway toward a low-carbon future,” Rubin stated.
Projects shifting ahead
Despite the troubles in New York, different U.S. tasks have been nonetheless shifting forward, a few of which began building earlier than the U.S. Federal Reserve began elevating rates of interest to combat inflation over a 12 months in the past.
U.S. vitality firm Avangrid’s 806-MW Vineyard Wind 1 off Massachusetts and Danish vitality agency Orsted’s 130-MW South Fork off Rhode Island and Massachusetts have been on monitor to provide first energy in late 2023.
Orsted, the world’s greatest offshore wind firm, stated it has additionally began onshore building at its 704-MW Revolution Wind off Rhode Island and Massachusetts and the 1,100-MW Ocean Wind 1 off New Jersey. Both tasks are anticipated to provide their first energy in 2025.
In Virginia, U.S. vitality firm Dominion Energy stated its roughly $10 billion, 2,587-MW Coastal Virginia Offshore Wind undertaking remained on price range and on monitor to start out offshore building in May 2024 with first energy anticipated within the second half of 2025 and completion in late 2026.
(Reuters – Reporting by Scott DiSavino and Nichola Groom. Editing by Jane Merriman)
