Four NY offshore projects ask for almost 50% price rise

The developers of four offshore wind farms in New York are seeking average price rises of almost 50% on their offtake agreements.

.

The New York State Energy Research and Development Authority (NYSERDA) calculated how the companies’ requested adjustment would impact strike prices, and found the average across all four was 48%.

.

The four projects involved are Oersted and Eversource’s 924 MW Sunrise Wind project, and Equinor and BP’s 816 MW Empire Wind 1, 1260 MW Empire Wind 2 and 1230 MW Beacon Wind.

.

Sunrise Wind asked its $110.37 price be increased to $139.99, a 27% increase, according to NYSERDA.

Empire Wind 1 asked its $118.38 price be increased to $159.64, a 35% increase

Empire Wind 2 asked its $107.50 price be increased to $177.84, a 66% increase.

Beacon Wind asked its $118.00 price be increased to $190.82, 62% more.

.

The four projects combined have an average price rise of 55%.

.

The multi-billionaire developers of the four projects are seeking a number of reliefs, including

1) retroactively applying (after the contract was signed) an inflation-adjustment mechanism similar to one included in New York’s recent third offshore wind solicitation, plus

2) interconnection cost adjustments, though the exact specifications differ between the developers.

.

According to NYSERDA, including ONLY the inflation adjustment mechanism would increase prices/MWh for the four projects by an average of 31% ON TOP OF THE ABOVE AVERAGE OF 55% 

https://renews.biz/87865/four-ny-offshore-projects-ask-for-almost-5...

.

Do we need any further proof that offshore wind is not as cheap as was bandied about by various pro-Wind shills.

If the Media did its job of informing the people, there would be a groundswell of opposition to Offshore wind.

FLOATING Offshore wind, as in the poor state of Maine, would be even more expensive.

APPENDIX

US/UK 66,000 MW OF OFFSHORE WIND BY 2030; AN EXPENSIVE FANTASY  

https://www.windtaskforce.org/profiles/blogs/biden-30-000-mw-of-off...

The US government has the fantasy of wanting to build 30,000 MW of offshore by 2030, i.e., just 7 years, but several companies, building projects for Massachusetts, will be allowed to walk away from the signed PPAs, and rebid at much higher prices next year.

The UK government has the fantasy of wanting to build 36,000 MW of offshore by 2030, i.e., in just 7 years,

That means placing in operation 66,000/7 = 9,428 MW of wind turbines/y, during 2024 through 2030

The continent-based European big wind companies currently have an offshore capacity of about 4,000 MW/y

These companies prefer the U.S. market, because Biden’s "Inflation-Reduction-Act” (IRA) has higher subsidies than the UK.

The IRA has “bonus” subsidies for domestic content requirements to create US jobs and US wind infrastructures

However, the EU is urging Biden to ignore the domestic content requirements, so Europe would receive “bonus” subsidies to create European jobs to build factories, ports, cranes, specialized ships, etc., for manufacturing and erecting nacelles, towers and rotor blades, to increase EU wind turbine exports to the US, UK, and other markets in future years.

The EU has a high-level goal to shame the US, rich in energy and other resources, into the wind/solar/battery blackhole, using UN IPCC scare-mongering about global-warming

NOTE: The specialized ships and cranes, almost all owned by European companies, are very expensive and take 3 to 4 years to design and build. They are booked years in advance, with upfront cancellation fees in escrow. Their lack of availability, even at high fees, delays projects, which increases $/installed MW

NOTE: The US will have at least a $1.0 trillion trade deficit and about a $2.0 trillion federal budget deficit in 2023. The US is in no position to engage in giveaways.

NOTE:

About 7,000 MW of offshore wind bids were awarded by the UK 4^th Auction, in 2022

No bids were submitted for the UK 5th Auction, in 2023; European companies protesting low UK subsidies.

Six Items of Interest

1) Vattenfall, Sweden, has put on hold 1,400 MW in 2023, and will re-evaluate its entire 4,200 MW zone, because its spreadsheets show a “net revenue shortage” of about 40%, meaning the prices, c/kWh, offered by the UK auctions are about 40% too low. 

https://www.offshorewind.biz/2023/07/20/breaking-vattenfall-stops-d....

2) OERSTED, Denmark, sees a $2.6 billion loss on its three US East Cost offshore wind systems, mainly due to high inflation, high interest rates, supply chain constrains and disruptions, and not being awarded “bonus” subsidies of the IRA.

https://www.reuters.com/business/energy/denmarks-orsted-anticipates...

3) EU big wind conglomerates want, on average, 40% more, because turnkey capital costs (foundations, turbines, cabling to shore, installation) increased to at least $5,500/installed kW, with bank loan rates at 6.5% in 2023, from $3,500/kW and 3% in 2021

4) UK and New York State bureaucrats are grossly uninformed regarding market conditions. They display zero business sense. New York State bureaucrats calculated their estimates of offshore wind contract prices, but when the owners saw those numbers, they said, we need up to 66% more, for our spreadsheets to make business sense.

Owners want a return on their investment of at least 10%/y, when bank loans and long-term CDs are 6.5%/y. The 3.5% is about a minimum for all the years of hassles of designing, building, erecting, and paperwork of a project

Below contract prices are after 50% US subsidies. See Items 4 and 6

Oersted, Denmark, Sunrise wind, NYS estimate $110.37/MWh, needs $139.99/MWh, a 27% increase

Equinor, Norway, Empire 1 wind, NYS estimate $118.38/MWh, needs $159.64/MWh, a 35% increase

Equinor, Norway, Empire 2 wind, NYS estimate $107.50/MWh, needs $177.84/MWh, a 66% increase

Equinor, Norway, Beacon Wind, NYS estimate $118.00/MWh, needs $190.82/MWh, a 62% increase

https://www.windtaskforce.org/profiles/blogs/liars-lies-exposed-as-...

5)

- Lifetime Performance of World’s First Offshore Wind Farm 

https://www.windtaskforce.org/profiles/blogs/lifetime-performance-o...

- IRENA prepares glossy offshore wind reports, that 1) ignore industry cost data of offshore wind systems in the UK, 2) overestimates capacity factors, 3) underestimates decreases in output with aging, 4) underestimates O&M/MWh. IRENA is a government-controlled, offshore wind rah-rah site, that cannot be trusted

https://www.windtaskforce.org/profiles/blogs/irena-a-european-renew...

6) Bloomberg recently reported, citing figures from Bloomberg-NEF: “The all-in, turnkey capital cost associated with a typical US offshore project, before bonus tax credits of the IRA, has increased by 57% since 2021. The increased costs of materials, energy, components, labor, and supply chain disruptions and constraints (shortage of European-owned specialized ships, etc.,) explain about 40% of that, with 60% due to increased financing costs; borrowing larger amounts/installed kW at higher interest rates