Dive Brief:
- Equinor and BP announced Wednesday they were scrapping a contract to sell energy to the state of New York from their planned offshore wind project, Empire Wind 2. The development is the latest in a series of delayed or canceled ventures within the U.S. wind power industry.
- The two energy majors said they had reached a deal with the New York State Energy Research and Development Authority to exit their Offshore Wind Renewable Energy Certificate agreement for Empire Wind 2, but added the decision “provides the opportunity to reset” an “already mature project to continue development in anticipation of new offtake opportunities.”
- The companies attributed the pivot to “changed economic circumstances” such as rising inflation, interest rates and supply chain disruptions. These financial constraints were cited by several other developers that exited similar contracts or terminated projects last year.
Dive Insight:
The announcement comes shortly after the project was greenlit by the Department of the Interior in November. The department said it was the sixth commercial-scale offshore wind energy project to be approved by the Biden-Harris administration, in line with the White House’s goal of deploying 30 gigawatts of offshore wind energy capacity by 2030.
Further, New York’s own climate law mandates that at least 70% of the state’s electricity comes from renewable energy sources and calls for the development of 9 gigawatts of offshore wind energy by 2035.
The Empire Wind complex — which comprises of the 1.26 gigawatt Empire Wind 2 and the 0.81 gigawatt Empire Wind 1 projects — is located 15 to 30 miles southeast of Long Island, spread across 80,000 acres and has the capacity to generate more than 2 gigawatts of power, according to Equinor and BP. The now-scrapped contract with New York State was finalized in 2022.
However, the European energy developers hinted at plans to reset the deal and “develop a stronger and more robust project going forward.” The decision to pivot falls within the recently-announced solicitation period offered by NYSERDA which allows companies to exit old contracts and re-offer projects at higher prices. Bids under this solicitation program are due by Jan. 25.
“Equinor and BP believe offshore wind can be an important part of the energy mix and are committed to maintaining substantial contributions to the state and local economy,” the companies said in a press release.
