N.Y. issues plan to speed offshore wind development

Source: Peter Behr, E&E reporter • Posted: Monday, September 19, 2016

New York state officials yesterday announced an Offshore Wind Blueprint laying out plans to accelerate commercial wind power off the south shore of Long Island and New York City.

The New York State Energy Research and Development Authority (NYSERDA) will lead the state’s effort to create offshore wind energy resources in a 16,740-square-mile area 12 miles offshore. NYSERDA will compete in an auction for development rights that the Interior Department’s Bureau of Ocean Energy Management (BOEM) plans to hold by the end of this year. Several private wind farm developers have also declared preliminary interest in bidding.

If NYSERDA is successful in the auction, it will undertake site assessments, environmental and economic impact analysis and grid interconnection studies, leading to a competitive selection of a project developer, the agency said. The wind farm’s energy would be sold through a power purchase agreement. A detailed master plan is expected to be ready by the end of 2017, according to the state.

Wind power projects off Long Island are a key element of Gov. Andrew Cuomo’s (D) campaign to have New York get 50 percent of its electric power from renewable energy sources by 2030.

The New York auction will be the sixth BOEM lease sale for wind energy in federal waters. Last November, the bureau awarded auction leases for more than 348,000 acres off the New Jersey shore to two companies for prices just over $5.30 an acre.

NYSERDA would be the first state agency to win a BOEM offshore wind development auction. The state — with its eye on the offshore projects’ economic benefits — is intent on using its lead role in the project to accelerate development at time when wind projects in adjacent states are also under way.

Deepwater Wind’s 30-megawatt Block Island wind project off the coast of Rhode Island is expected to be commissioned by the end of this year, making it the first offshore wind farm to operate in the United States, the Department of Energy noted.

Several other Atlantic coast wind projects have run into headwinds, however. DOE listed 23 offshore U.S. wind projects totaling more than 16 gigawatts in various stages of development, in a recent wind technologies report.

Offshore wind projects in the United States require two separate steps, NYSERDA noted: acquiring a development lease on federal underwater lands and a power purchase agreement to sell the wind energy to a utility.

“This creates substantial risk for developers who pursue leasing at great financial risk and uncertainty without the stability of power purchase agreements,” NYSERDA said. “In turn, this risk reduces efficiency of development efforts and increases overall project cost. The Master Plan will join these two critical elements, reducing development risk, lowering costs, and enabling the greatest possible benefit to the state.”

New York currently draws on 5,700 MW of zero-carbon hydropower, and 1,400 MW of onshore wind generation in upstate New York. It could add several thousand megawatts both offshore and from new upstate wind farms if enough high-voltage transmission capacity can be built to get the power to metropolitan areas, according to Edward Krapels, a director of Anbaric, which is building independent transmission projects to deliver power to the state.

New offshore wind production remains far more expensive than onshore wind and fossil fuel generation, according to the U.S. Energy Information Administration’s comparisons of levelized costs to build and operate power generation.

Levelized costs for offshore wind averaged $175.6 per megawatt-hour before tax benefits for projects coming online in 2020, according to a 2015 EIA estimate, compared to $75 for onshore wind and $82 for combined-cycle natural gas generation. A new report by the Lawrence Berkeley National Laboratory and other research groups predicts that wind power project costs will continue to trend down, with offshore development making the most pronounced gains (E&ENews PM, Sept. 13).

New York has included costs of its climate goals directly in the state’s energy plan, creating a zero-emissions credit to be paid to three upstate nuclear plant operators, reflecting the value of the carbon-free electricity the plants produce. The credit is designed to help ensure the plants’ continued operation through 2029, when the credit program would end. The initial credit for the program’s first two years would total $17.48 per MWh.