New York signs biggest deal yet for offshore wind energy

New York state officials struck deals with two offshore wind energy developers to build 1,700 megawatts of capacity off Long Island, aiming to have turbines in operation by 2024 that could potentially power more than 1 million homes.

The projects would also bring 1,600 jobs and $3.2 billion in economic activity, according to state energy planners. Ørsted, one of the winners in the New York power agreement bidding, says its investments in the state will include training programs for new workers – seen as a critical need for the budding U.S. wind industry.

Ørsted also plans a new operations and maintenance center near Port Jefferson, N.Y., to include dockage for a 250’ service operation vessel.

Building a Jones Act-compliant vessel of that size for the U.S. market would be a jump up from a first generation of U.S.-built crew transfer vessels now under construction for Ørsted, and could be a signal for other offshore operators to take on the risk of investing in a first U.S.-flag wind turbine installation vessel (WTIV) ahead of an anticipated tight global market for those specialized assets.

“Sunrise Wind will bring renewable energy and new economic development to New York,” said Lee Olivier, executive vice president of enterprise energy strategy at Eversource, Ørsted’s partner in that 880 MW project on a federal lease 30 miles east of Long Island. “We look forward to partnering with New York State as a clean energy leader in the Northeast as well as with the local communities and businesses on Long Island and throughout the state.”

The other contract winner is Equinor, one of the early arrivals in the New York Bight when it acquired a 79,350-acre federal lease, tucked between two traffic separation lanes in and out of New York Harbor. Dubbed Empire Wind, that 816 MW project together with Sunrise Wind will total almost 1,700 MW capacity, according to the New York State Energy Research and Development Agency that manages the state’s renewable energy planning.

The New York contracts eclipse New Jersey’s recent deal with Ørsted, which would build 1,100 MW of capacity off Atlantic City and the state’s southern beaches. That marked culmination of a sharp policy reversal under New Jersey Gov. Phil Murphy, who committed to wind power soon after taking office.

“Today, New York made the single largest commitment to offshore wind by a state in U.S. history to grow our clean energy economy, combat climate change and achieve economy-wide carbon neutrality,” said NYSERDA president Alicia Barton in announcing the contracts July 18.

Anthony Logan, senior analyst for North American wind power with energy consultants Wood Mackenzie, said the developers will probably leverage the last available phase-out value of the federal investment tax credit at 12%, the renewable energy subsidy Congress provide to encourage investment in the technology.

“New York had a significant need for new renewable generation to serve both Long Island and New York City, and rather than attempt to award each in subsequent solicitations, they made a massive bet on the capacity of this very nascent sector to build two projects simultaneously.

But the scale of the New York plans shows how state government and developers are valuing the sector.

“This was more than twice the capacity indicated by the Public Service Commission beforehand, and more than the 1.1 GW awarded by New Jersey just weeks ago, which had previously been considered an eye-popping figure for the U.S. market when their auction was first announced,” Logan wrote in an analysis of the awards.

“These are high-quality wind sites, evidenced by the nearly 50% capacity factors the projects are advertising. Distance to shore will be a challenge for Sunrise, with an extremely long export cable required, but the European offshore sector has made enormous cost-reduction strides in long-distance cabling, so what would have been a project-killing geographical circumstance five years ago has clearly been mitigated,” Logan wrote.

The New York and New Jersey contracts also put Ørsted into a dominant position off the East Coast.

“Sunrise’s win is something of a vindication for Ørsted after it very publicly lost the Massachusetts auction in 2017 offering a project from the same lease area, and subsequently bought successful U.S, developer Deepwater Wind,” Logan noted

“Denmark’s Ørsted is now the undisputable center of the U.S. offshore wind market with roughly 3 gigawatts (3,000 MW) of awarded projects; given the currently expected solicitation schedules of other states, no other developer could likely amass a similar portfolio until at least 2022.”

Equinor will used gravity-based turbine foundations for the Empire Wind project, but that foothold in U.S. waters could help position the Norwegian energy company to enter the California offshore wind market with its floating turbine technology, according to Logan. Then known as Statoil, Equinor pioneer the first commercial floating turbine array with its Hywind project off Scotland.

The initial federal lease for Empire Wind, won by Statoil in 2016, was challenged in federal court by the Fisheries Survival Fund, an alliance of scallop vessel operators, and other groups and fishing communities.

But that effort to block the lease was denied in a Sept. 30, 2018 ruling by U.S District Court Judge Tanya Chutkan, Citing precedent from oil and gas cases, the judge found that the BOEM lease could not be challenged because the government had not committed “irreversible and irretrievable commitment of resources.”

Nor could the fishermen overcome a requirement that they had to give a 60-day notice before filing the lawsuit, despite their argument that the notice should have been waived since there were only 45 days between BOEM sale notice and the lease auction.

”The environment and climate change are the most critically important policy priorities we face,” said Gov. Andrew Cuomo when he announced the power agreements, accompanied by former vice president Al Gore.

“They literally will determine the future – or the lack thereof,” said Cuomo. “Even in today’s chaos of political pandering and hyperbole there are still facts, data and evidence – and climate change is an undeniable scientific fact. But cries for a new green movement are hollow political rhetoric if not combined with aggressive goals and a realistic plan on how to achieve them.”

Cuomo’s previous policy announcements have been revving the offshore wind market for months, contributing to a sense that projects will move forward.

“When Governor Cuomo increased the U.S. offshore wind market by 62 percent in January, industry opportunities and challenges became very clear, very quickly,” said Liz Burdock, president of the industry advocacy group Business Network for Offshore Wind.
“Adding to the Governor’s increase of the state’s offshore wind target to 9,000 MWs by 2035, these awards confirm New York’s role as a national leader in the U.S. and establish the state as a global leader of the offshore wind market,” said Burdock.

But even as New York steps on the gas pedal for wind power, federal regulators may be applying the brake in southern New England.

Developer Vineyard Wind was on track to start onshore construction toward its planned 800 MW array south of Martha’s Vineyard, Mass., be December, until the company announced the federal Bureau of Ocean Energy Management would not complete a final environmental impact statement as expected by July 12.

The New Bedford Standard-Times reported Thursday that Massachusetts Gov. Charlie Baker said federal officials has offered new “guidance” on outstanding issues. Baker said state officials are working on those – but neither Baker nor Vineyard Wind would talk about them.

The fishing industry and some environmental groups are pushing on a number of issues around the project, including safe vessel transit lanes through the arrays, and potential effects on wildlife – especially the extremely endangered North Atlantic right whales that feed and migrate in the area, and now number just over 400 surviving animals.

The pressure on government agencies to do more to protect the whales is rapidly ratcheting up. Canadian authorities announced Friday that two more dead right whales were confirmed in the Gulf of St. Lawrence, raising the 2019 toll to eight and raising the prospect of another catastrophic year like 2012 when a dozen animals died, with ship strikes and fishing gear entanglement the primary suspects.

About the author

Kirk Moore

Associate Editor Kirk Moore was a reporter for the Asbury Park Press for over 30 years before joining WorkBoat in 2015. He wrote several award-winning stories on marine, environmental, coastal and military issues that helped drive federal and state government policy changes. He has also been a field editor for WorkBoat’s sister publication, National Fisherman, for almost 25 years. Moore was awarded the Online News Association 2011 Knight Award for Public Service for the “Barnegat Bay Under Stress,” 2010 series that led to the New Jersey state government’s restoration plan. He lives in West Creek, N.J.

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