Wind Power

04 Mar 2024

Equinor, Orsted Get Ok for New York Offshore Wind Projects

04 Mar 2024  by rigzone   

New York State has conditionally awarded two offshore wind projects, Equinor’s 810-megawatt (MW) Empire Wind 1 and Orsted’s and Eversource’s 924-MW Sunrise Wind, in its fourth offshore wind solicitation round.

The projects, totaling over 1,700 MW of clean energy, will be the largest power generation projects in the state in over 35 years once they enter operation in 2026, and will continue progress towards achievement of the state’s Climate Leadership and Community Protection Act goal to develop 9,000 MW of offshore wind energy by 2035, according to a news release from the New York State Energy Research and Development Authority (NYSERDA). The awards are conditional on successful contract execution.

Empire Wind I, located 15 miles off New York’s shore, and Sunrise Wind, located more than 30 miles east of the eastern point of Long Island, have already completed most federal and state permitting milestones, according to the release. Empire Wind I in February received final approval of its construction and operations plan from the Bureau of Ocean Energy Management (BOEM). Both projects are expected to ramp up construction activity this year.

“I promised to make New York a place for the renewable energy industry to do business, and we are delivering on that promise,” New York Governor Kathy Hochul said. “Offshore wind is foundational to our fight against climate change, and these awards demonstrate our national leadership to advance a zero-emissions electric grid at the best value to New Yorkers.”

Equinor and NYSERDA will now negotiate an Offshore Wind Renewable Energy Certificate (OREC) purchase and sale agreement, and the company expects contract execution in the second quarter.

“Today’s award is an important milestone in our continued efforts to maximize value creation from Empire Wind 1, currently one of the biggest and most mature renewables projects in the US”, Equinor Renewables Executive Vice President Pål Eitrheim said in a statement. “The award represents an important contribution to New York’s climate ambitions from a large-scale project in a growth market that has demonstrated a strong commitment to offshore wind. We are working diligently to bring the project to an investment decision during the third quarter of this year. With the use of project financing, we currently expect our US East Coast offshore wind investments to deliver full-cycle nominal equity returns within the range of 12-16 percent. We intend to farm down to a new partner at the right time to further enhance value and reduce our exposure”.

Following a final investment decision expected in mid-2024, Equinor said it plans to use project financing, with financial close anticipated by the end of 2024. The company also intends to bring in a partner to enhance value and reduce ownership share and exposure.

Equinor in January announced a swap transaction with BP plc, under which Equinor will take full ownership of the Empire Wind lease and projects and BP will take full ownership of the Beacon Wind lease and projects. The transaction is subject to regulatory approval and closing of the transaction is expected in the second or third quarter, according to the statement.

Sunrise Wind will begin the next steps of finalizing agreements with NYSERDA on the OREC contract, Orsted said in a separate statement. The project is expected to be operational in 2026 and will begin the full scope of construction once it has received all federal permits, slated for this summer. The final investment decision on Sunrise Wind is expected to be made in the second quarter.

Ørsted will acquire Eversource’s 50 percent ownership share in Sunrise Wind, becoming the sole owner of Sunrise Wind, subject to signing of an OREC contract with NYSERDA, finalization of acquisition agreements, receipt of the federal construction and operations plan, and relevant regulatory approvals. Eversource will remain contracted to lead the project’s onshore construction, according to the statement.

David Hardy, Group EVP and CEO Americas at Orsted, said, “We’re ready to build on the foundation we’ve laid with New York’s first offshore wind project, South Fork Wind, while delivering significantly more jobs, local supply chain and community investments, and renewable power for New Yorkers”.

Eversource Energy Chairman, President and CEO Joe Nolan said, “Sunrise Wind is another major step forward for our shared clean energy future and will deliver significant new investments to New York State, including the creation of hundreds of local union jobs building the project’s onshore transmission system. We’re excited to get shovels in the ground and begin the full scope of onshore construction”.

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