New York Rejects Plan to Rescue Sinking Wind Projects

Offshore wind developers aren’t going to get more money from New Yorkers to complete their projects.

On Thursday, New York’s Public Service Commission, which regulates utilities, rejected a request by an alliance of developers of offshore wind and other large-scale renewables projects to have their contracts adjusted for higher costs.

The difference, which the commission’s staff estimated to be $12 billion, would have translated to ratepayers paying an extra $4.67 a month on their electricity bills, according to an analysis by the New York State Energy Research and Development Authority (NYSERDA).

The projects, 91 in all, make up 13.5 gigawatts of planned capacity, almost a quarter of what the state projects it will need by 2030. They include four offshore wind farms that would make up over four gigawatts of capacity, plus a mix of onshore wind, solar, and transmission projects. In the run-up to Thursday’s meeting, an alliance of labor, business, and environmental groups pushed the commission to accept altering the contracts in order for the projects to stay on track.

The entire offshore wind industry has been dealing with rapidly rising costs and has been in a game of chicken with governments across the world over who should shoulder them.

What happens next, especially for the four offshore wind projects in New York state, is, well, up in the air. It’s possible that the developers could cancel the projects and the state could put them out for another round of bidding. There could be some kind of deus ex machina funding coming from taxpayers, a coalition of states in the region, or the federal government.

In New Jersey, the state legislature and governor agreed to send federal subsidies to offshore wind developers in order to keep costs down. But in Massachusetts, developers agreed to pay cancellation penalties instead of going through with projects that they thought were uneconomic.

On Thursday, New York’s commissioners placed blame for any cancellation or delay of the offshore wind projects on the developers for not being able to deliver profitable projects within the terms of their original contracts.

“Many are left with the impression that the fate of the clean energy transition rests entirely on this action today,” the commission’s Chairman Rory Christian said. “These projects ... collectively represent a portion of our collective effort to bring various mandates ... to bear and achieve the clean energy future demanded by the public.”

Existing New York state law mandates that 70 percent of the state’s electricity come from renewables by 2030. For downstate New York — the Hudson River Valley, New York City, and Long Island — this law means a fast energy transition, as the region is largely dependent on fossil fuels, namely natural gas, for electricity. It also makes up the bulk of the state’s population and electricity use. Since the shutdown of the Indian Point nuclear power plant in 2021, the region's energy future has long been assumed to be offshore wind.

The developers “could still re-bid and, if successful at a future solicitation,” a filing by NYSERDA said, “however, this could result in significant delays and thus impact the state’s progress towards achieving the Climate Act goal of serving 70% of the State’s electric load with renewable energy by 2030.”

“These projects are not everything,” Christian responded. “They are one part of our portfolio.”

“Some large-scale projects facing massive milestone payments need greater certainty than afforded by today’s decision, and unfortunately will likely cancel projects and withdraw from the New York market. Other projects will have the ability to re-bid, and we do expect that many will re-bid,” said Anne Reynolds, executive director of the Alliance for Clean Energy New York, an industry group that petitioned for the contract adjustments.

“We also expect that collectively, hundreds of millions of dollars that were invested as contract deposits will be lost; the bid prices will be higher based on the same inflation pressures we described in our petition; the 2024 construction season will be missed; and various grid interconnection deadlines will be missed.”

The commissioners, both Republican and Democrat, were little moved by developers’ pleas that the projects would be delayed or even canceled.

“The developers have a contract,” said Commissioner Tracey Edwards. “The audacity that you would think this commission would grant an additional $12 billion ... [it]is just not doable. Walking away is your choice and we certainly hope you do not do that.”