'Pole position' | New York’s offshore wind round 4 sets up supply chain leadership
Pricing around $150/MWh for Equinor and Orsted-led projects points to medium term trend, but analysts caution contract details are still murky
New York’s move to expand its pipeline of active projects through its fourth-round solicitation (NY4) “will restore developer confidence in a nascent US offshore wind industry battling adverse economic headwinds over the last three years,” said BNEF senior associate in wind energy Atin Jain.
Both awarded projects, Equinor’s 810MW Empire Wind 1 and Orsted-Eversource’s 920MW Sunrise, are well advanced in the federal permitting regime and have invested in a burgeoning local supply chain and could be installed and commissioned as early as 2026.
By then, New York could be “home to three out of the six earliest large-scale offshore wind projects to reach commercial operation in the entire US,” said Sorensen.
“With that distinction comes a pole position in the emerging American supply chain, as the state will naturally also be home to some of the earliest functioning offshore wind infrastructure in the US,” she added.
Pricing trend
Priced at around $150/MWh by most estimates, NY 4 falls in line with both the New York and New Jersey’s recent third round tenders.
“We are starting to see what the new price of offshore wind in the US is, post-CoVid-19 and the Ukraine war,” said Sorensen, adding that this “new equilibrium will likely last for some time before we see prices falling again.”
Sorensen warns that these are only preliminary assessments, though, as contracts have yet to be hammered out between the New York State Energy Research and Development Authority (Nyserda), the agency charged with overseeing the state’s energy transition, and developers.
“We will have to wait until we have more clear information about the individual project strike prices and what they entail, particularly from New York, to really understand the price levels,” she said, adding that “the numbers we have from the different solicitations are not the same and the contracts also have different terms.”
BNEF estimates the levelised tariff in NY4 at $109.7/MWh in real 2023 dollars across the 25-year contract terms, “significantly higher than the prices for their earlier contracts for the same projects,” according to BNEF's Jain.
BNEF said Sunrise's 2019 contract at $80.7/MWh, and Empire at $90.9/MWh.
While Nyserda has not released ratepayer impacts for NY4, New Jersey sees its latest offshore wind projects hiking residential ratepayers’ monthly bills $6.84, more than double the $2.93 hit to New Yorkers for its third round.
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