Posted on April 22, 2024
This story was updated at 6 p.m. EDT.
New York canceled power contracts for three offshore wind projects Friday, citing a turbine maker’s plans to scrap its biggest machines.
The news is a heavy blow to the U.S. offshore wind industry and a major setback for the climate ambitions of New York — and President Joe Biden. The three projects would have delivered 4 gigawatts of offshore wind to the state, amounting to almost half of New York’s 2035 goal.
The failed projects add to a tumultuous period for the Empire State, which saw delays on four other projects due to cost problems. Two of them proceeded after securing new contracts with higher prices, while two others have been paused.
Offshore wind has been hit hard by rising construction and financing costs. BloombergNEF estimates that the cost of building an offshore wind project rose 60 percent between 2021 and 2024, driven in large part by rising interest rates.
Provisional contracts awarded in October to the three projects canceled Friday were supposed to be a solution for ballooning costs. They included higher prices that were indexed to inflation.
But in an announcement Friday, the New York State Energy Research and Development Authority said it failed to come to terms with the three projects after GE Vernova and LM Wind Power decided to scrap plans for an 18-megawatt turbine in February. That meant the project developers would have had to install more turbines to supply the amount of electricity they had promised to send to the state, raising their project costs.
“Given these developments, no final awards will be made,” NYSERDA said Friday, adding that it “will look to advance a future competitive solicitation.”
The three projects are Attentive Energy, Community Offshore Wind and Excelsior Wind.
The news is a blow to Biden, who pledged to see enough offshore wind built to supply 10 million homes by 2030, and New York Gov. Kathy Hochul, a Democrat who has touted offshore wind’s ability to create a wave of jobs and a surge in clean power.
When the other four projects ran into price challenges last year, Hochul quickly released a 10-point plan aimed at rescuing the industry. Among the state’s first steps was announcing the contracts that were canceled Friday.
“While GE’s pivot has affected three planned offshore wind projects, Governor Hochul remains committed to building the offshore wind industry, and protecting New Yorkers’ wallets,” Katy Zielinski, a spokesperson for the governor, said in a statement Friday. “New York will continue to advance a clean energy future and take all actions to preserve a competitive process that ensures New York consumers are getting the best deal.”
The announcement is also a big blow to GE Vernova, which was recently spun off from GE as a stand-alone company focusing on renewable energy. A GE Vernova spokesperson did not provide a rationale for dropping the 18-MW turbine in a statement but said the company was “committed to working with all public and private stakeholders to support the growth of the next chapter of offshore wind in New York and beyond.”
Vineyard Offshore, the developer of Excelsior Wind, said in a statement that the state’s decision was “warranted given GE Vernova’s failure to follow through on their commitment to deliver an 18MW machine.”
“While this latest development is unfortunate, Vineyard Offshore looks forward to working with the Hochul Administration and NYSERDA to advance the next solicitation process in New York,” the company said.
The developers of Attentive Energy and Community Offshore Wind did not immediately respond to requests for comment.
This is not the first time that supply chain woes have tripped up offshore wind in New York. Equinor had planned on using towers built in the port of Albany for its Empire Wind project. But a spike in construction costs has cast the future of the tower factory into doubt and prompted Equinor to update its plans.
It is now planning to use imported towers for the first phase of its Empire Wind project, which received an updated contract from the state at the start of the year. The second phase of Empire Wind has been paused.
Empire Wind 1, at 810 MW, is one of two projects moving forward in the state. The other is Sunrise Wind, an 880-MW project. New York saw the completion of South Fork Wind earlier this year. The 130-MW project is the first offshore wind project to serve the state.
