New York hits the brakes on 2.5 GW solicitation of offshore wind due to COVID-19

Source: by Iulia Gheorghiu, Utility Dive • Posted: Sunday, April 26, 2020

  • The New York Public Service Commission (PSC) approved an order on Thursday authorizing a state solicitation of up to 2,500 MW of offshore wind, on a 4-1 commission vote.
  • This is the second solicitation authorized by regulators. In 2019, the New York State Energy Research and Development Authority (NYSERDA) selected two projects of 880 MW and 816 MW expected to come online by 2024.
  • NYSERDA had requested to hold a 2020 solicitation, but energy officials are suspending the solicitation due to the novel coronavirus pandemic. New York has seen the most COVID-19 cases and casualties in the country, leading state agencies to reprioritize their plans.

Dive Insight:

Action was expected from regulators to hasten offshore wind development. New York needs to solicit 1,800 MW more of the resource to meet its 2,400 MW goal by 2030.

The PSC comment period for the order closed just three days before regulators finalized it, which was faster than anticipated. Clean energy advocates applauded regulators for acting so quickly.

“The quick pace is a happy surprise for many in the industry who had urged the commission to move quickly in light of the expiring tax credit and other factors,” Noah Shaw, partner at Hodgson Russ and former general counsel at NYSERDA, told Utility Dive.

However, NYSERDA put the brakes on a potential solicitation this summer. “While NYSERDA fully supports and is poised to execute on this authorization, based on industry input and a careful assessment of New York’s COVID-19 status, we feel that issuing a near term solicitation would not be responsible nor advisable at this time,” according to a statement from the agency.

Regulators view the accelerated cost reductions for the technology combined with its environmental attributes and economic development benefits as “an overall benefit to New Yorkers,” according to the order.

The Phase 1 procurement of contracts for 1,696 MW of offshore wind “are expected to range between a net direct cost of approximately $0.4 billion and a net direct benefit of approximately $1.9 billion, based on contracted prices and depending on future market prices,” according to a NYSERDA report.

While the second solicitation is not expected this summer, New York is positioning itself as a leader in the market. Gov. Andrew Cuomo mentioned the pursuit of 1,000 MW or more of additional offshore wind this year in his annual address and the state is targeting 9,000 MW of the resource by 2035. New Jersey is pursuing a 3,500 MW goal by 2030 and Massachusetts is targeting 3,200 MW by 2035.

This would be the largest solicitation for offshore wind capacity in the U.S., according to the New York Offshore Wind Alliance.

New York “is also focused on positioning itself at the forefront of the Northeast market to, among other things, maximize economic benefits to New Yorkers and attract the regional supply chain — a jobs opportunity that is even more needed as the State will look to boost its economy after the COVID shutdown,” Shaw said.

“Given the dynamic nature of the situation, NYSERDA is closely monitoring the ongoing crisis to determine the best time to issues this solicitation in coordination with a $200 million opportunity to upgrade New York’s ports,” NYSERDA said.

Others in the nascent U.S. offshore wind industry voiced concerns that the safety restrictions and economic downturn anticipated with COVID-19 would scatter the growing supply chain in the region. Having New York double down on its investment in offshore wind will “ensure the pipeline to U.S. small business suppliers stays open and ready for business,” Liz Burdock, president and CEO of the Business Network for Offshore Wind, said in a statement.

The order did not set a deadline for the next round of proposals, but advocates “anticipate timely action by NYSERDA,” according to Jeff Vockrodt, executive director of Climate Jobs NY.