New York Wind Farm Deal Scrapped, but Project Might Not Be Completely Dead

Challenging economic circumstances have reportedly led to another major offshore wind power project to be scrapped.

New York City, USA, March 15, 2020 Sergii Figurnyi/Shutterstock

Plans to provide offshore wind power to New York City through the Empire Wind 2 project have been scrapped due to challenging “economic circumstances,” however, a company executive has hinted the project might not be completely dead.

A joint venture between Norwegian state-owned multinational energy company Equinor and British multinational oil and gas company BP, Empire Wind 1 and Empire Wind 2 were approved in November last year. Combined, they were expected to have a total capacity of 2,076 megawatts, enough to power 700,000 homes per year.

Equinor revealed in a Jan. 4 statement that part of the project wouldn’t be moving forward. An agreement has been reached with the New York State Energy Research and Development Authority (NYSERDA) to terminate the Offshore Wind Renewable Energy Certificate (OREC) Agreement for Empire Wind 2.

According to the energy company, Empire Wind 2 was terminated due to “commercial conditions driven by inflation, interest rates, and supply chain disruptions” that prevented its existing OREC agreement from being viable.

Wind turbines generate electricity at the first commercial offshore wind farm in the United States, Block Island, near Rhode Island, on July 7, 2022. John Moore/Getty Images

“This agreement reflects changed economic circumstances on an industry-wide scale and repositions an already mature project to continue development in anticipation of new off-take opportunities,” the statement said.

Like many other industries, the United States offshore wind industry struggles with rising inflation, supply-chain issues and other factors driving up costs. Several other projects are reportedly in jeopardy as developers recalculate financial aspects for proposals modeled several years ago in very different economic conditions.

Danish wind power firm Ørsted already opted to halt two U.S. offshore wind projects in New Jersey late last year, citing higher costs and supply chain problems. Ocean Wind 1 and 2 were scheduled to be constructed off the coast of Cape May County.

Empire Wind 2 Could Return in Another Form

Molly Morris, president of Equinor Renewables Americas, said that “ambitious projects” of this scope must have “commercial viability” to proceed.

However, she also hinted that Empire Wind 2 might not be completely dead in the water, calling the contract cancellation a “reset,” foreshadowing that the project could return in some form. Although, she didn’t provide any further details as to what that might entail.

“The Empire Wind 2 decision provides the opportunity to reset and develop a stronger and more robust project going forward,” Ms Morris said.

“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,” she added.

President Joe Biden points to a wind turbine size comparison chart during a meeting about the Federal-State Offshore Wind Implementation Partnership. Drew Angerer/Getty Images

Empire Wind 1 and Empire Wind 2 only recently hit a key federal permitting milestone after receiving a federal record of decision from the Bureau of Ocean Energy Management (BOEM). At this stage, Empire Wind 1’s OREC agreement is unchanged. Empire Wind 2 was expected to account for the lion’s share of the project’s 2,076 megawatts output, and it’s unclear if anything will be done to offset the loss of Empire Wind 2’s capacity of 1,260 megawatts.

In 2021, the Biden Administration outlined goals to deploy 30 gigawatts of offshore wind energy by 2030. His administration approved the Vineyard Wind and Southfork Wind projects in Massachusetts that same year. The November 2023 approval of the Empire Wind project marked the sixth approval of wind power projects.