Equinor and BP cancel gigawatt project in New York — EnergyWatch

So much for the first offshore wind project in New York. Equinor and BP, who are jointly developing three projects, have decided to cancel the contract with the authorities for the largest of them, the 1,260 MW Empire Wind 2, the parties announce.

”Commercial viability is essential for ambitious projects of this size and scope. The decision on Empire Wind 2 provides an opportunity to reset and develop a stronger and more robust project going forward,” Equinor’s US country manager Molly Morris said in a statement.

In October, the New York Public Utilities Commission denied a request from both the two developers and Ørsted, which owns the Sunrise Wind project in the state. In light of rising costs, the developers had asked for, among other things, a significant increase in contractually agreed settlement prices.

In the case of Equinor and BP, Empire Wind 2 requested the largest increase of all the projects. Instead of the USD 107.5/MWh secured in the tender, the oil companies wanted a price of USD 177.84/MWh. In addition to the actual settlement, the duo – unlike Ørsted – also wanted significantly more help to pay for the interconnection.

After the fall rejection, BP stuck to its earlier statement that the project would have to meet the company’s stated rate of return of at least 6-8% to stay alive. However, even though the contract is now canceled, it does not mean that the project is dead. The authorities in New York have stated that it will be possible to rebid the capacity of such projects in future tenders.

”For New York to continue to be a climate leader, we need to be proactive in addressing the impending challenges facing the clean energy industry,” New York Governor Kathy Hochul said in November when announcing an upcoming flash bid for the likely lost capacity.

Potential bidders must submit bids in January, with the decision scheduled for late February. Equinor and BP are also developing Empire Wind 1 and Beacon Wind of 816 MW and 1.2 GW respectively in New York. The announcement from the bidders does not specifically state whether Empire Wind 2 will be included in the current tender, or what the plan is for the other two.

Ørsted has also not announced the future of its Sunrise Wind project.

In addition to the contracted but financially challenged projects from the oil companies and Ørsted, there are a number of sites around New York that are also eligible to bid in the tender.

That prices are set to be significantly higher than in the first two tenders was indicated in October, when the third round was decided. Here, the average winning prices were 145 USD/MWh.