The US joint venture between BP and Equinor has agreed with the New York State Energy Research and Development Authority (NYSERDA) to terminate the Offshore Wind Renewable Energy Certificate (OREC) agreement for the 1,260 MW Empire Wind 2 offshore wind project that recently obtained federal approval.
The move comes after the joint venture, and two other offshore wind developers, tried renegotiating their OREC contracts last year to address recent inflationary pressures that are impacting project economics. In October 2023, the New York State Public Service Commission (PSC) denied petitions filed by the offshore wind developers seeking financial relief.
A couple of months before the New York PSC’s decision , BP and Equinor said they did not plan on developing their joint projects off New York unless they met the ”return thresholds of 6% to 8%”.
In a press release announcing the termination of the agreement with NYSERDA, besides inflation and increased interest rates, Equinor cites supply chain disruptions as one of the challenges that prevented Empire Wind 2’s existing OREC agreement from being viable.
The company also says the termination agreement repositions the project to “continue development in anticipation of new offtake opportunities”.
“Commercial viability is fundamental for ambitious projects of this size and scale. The Empire Wind 2 decision provides the opportunity to reset and develop a stronger and more robust project going forward,” said Molly Morris , president of Equinor Renewables Americas. “We will continue to closely engage our many community partners across the state. As evidenced by the progress at the South Brooklyn Marine Terminal, our offshore wind activity is ready to generate union jobs and significant economic activity in New York.”
The joint venture between BP and Equinor is developing two projects at its Empire Wind lease site, the 816 MW Empire Wind 1 and the 1,260 MW Empire Wind 2, which recently received the federal go-ahead from the Bureau of Ocean Energy Management (BOEM).
In December 2023, Empire Wind 1 also received its Article VII Certificate of Environmental Compatibility and Public Need in New York.
The Empire Wind Phase 1 wind farm was selected in New York’s first-ever offshore wind solicitation in 2019 alongside Ørsted and Eversource Energy’s Sunrise Wind project. The Empire Wind 2 was selected in the state’s offshore wind power solicitation in January 2021 together with their Beacon Wind 1 project south of Nantucket.
The offshore wind farms are planned to utilise Vestas V236-15.0 MW wind turbines .