Equinor and BP have announced the termination of the Offshore Wind Renewable Energy Certificate Agreement with the New York State Energy Research and Development Authority (NYSERDA) for the Empire Wind 2 project.
Empire Wind 2 is planned with potential generative capacity of 1,260 MW. It is the second phase of the Equinor and BP’s Empire Wind project, with a combined potential capacity of more than 2 GW. The lease for the project was acquired in 2017.
Offshore Wind Renewable Energy Certificates, or ORECs, are essential for facilitating the development of offshore wind in New York State. NYSERDA buys ORECs from project developers and sells them to utilities and load serving entities in order to achieve the state’s renewable energy objectives.
Equinor said the decision to terminate the OREC agreement with NYSERDA reflects changes in the economic circumstances within the industry and provides an opportunity for a project reset by repositioning it to continue development in anticipation of new offtake opportunities. Factors such as inflation, interest rates, and supply chain disruptions have rendered the existing agreement unviable.
“Commercial viability is fundamental for ambitious projects of this size and scale,” said Molly Morris, president of Equinor Renewables Americas. “The Empire Wind 2 decision provides the opportunity to reset and develop a stronger and more robust project going forward. We will continue to closely engage our many community partners across the state, generating union jobs and significant economic activity in New York.”
The Empire Wind 1 and Empire Wind 2 projects recently achieved significant permitting milestones, having received the federal Record of Decision from BOEM. Empire Wind 1 also obtained its Article VII Certificate of Environmental Compatibility and Public Need in New York last month.
The termination of the OREC agreement deals the latest blow to New York’s offshore wind project pipeline following Orsted’s decision to halt the development of its 2,248-megawatt (MW) Ocean Wind 1 and 2 projects off New York and New Jersey.
BP booked a third-quarter writedown of $540 million last year after officials in New York state rejected a request for higher rates for consumers due to inflationary pressures impacting project economics. Equinor also booked a $300 million impairment on the projects.
“BP is supportive of NYSERDA’s leadership and commitment to offshore wind, which we believe is a critical part of New York State’s and America’s clean energy future,” said Joshua Weinstein, bp’s president of offshore wind Americas. “Offshore wind can deliver reliable renewable power as well as economic benefits to the state and its communities.”
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