New York state authorities have denied a request by Orsted, BP, and Equinor to increase the price of electricity in future power purchase contracts for offshore wind energy. The developers of offshore wind projects have been grappling with rising costs of raw materials and components, along with higher borrowing costs, raising concerns about the viability of several projects planned for New York's coastal waters.
Orsted, one of the developers, stated that the Sunrise Wind project, with a planned capacity of 924 MW to supply electricity to 600,000 households, faces significant challenges without the requested price adjustment. The project is also expected to involve several hundred million dollars in investments in the state and create 800 jobs.
Equinor, which is involved in multiple projects with BP, voiced concerns over the financial sustainability of offshore wind projects in the U.S. due to increasing costs. These rising costs have already led to the cancellation of a large-scale wind project off the coast of the UK, highlighting the industry's financial challenges.
In response to mounting cost pressures, wind developers have sought additional tax incentives and higher electricity prices from governments, challenging the notion of cheap wind power. However, the New York Public Service Commission rejected the request, citing that compliance would have added 6.7% to New Yorkers' already high electricity bills.
This decision underscores the challenges faced by offshore wind developers as they navigate cost escalations and seek ways to ensure the financial viability of their projects while meeting renewable energy goals.