Equinor has closed on a project financing package of more than $3 billion for its U.S. offshore wind endeavor, Empire Wind 1.
“This is an important milestone for Equinor, in line with our plan to enhance value and reduce exposure in the Empire Wind 1 project. As we now enter full execution mode, we continue our efforts to increase robustness and value-creation in the project,” said Jens Økland, acting executive vice president for Renewables in Equinor.
Empire Wind 1 is located 15-30 miles southeast of Long Island and spans 80,000 acres. With a contracted capacity of 810 megawatts (MW), Empire Wind 1 is poised to be the first offshore wind project to connect to the New York City grid. Commercial operation is expected by 2027, according to Equinor.
The expected total capital investments, including fees for the use of the South Brooklyn Marine Terminal (SBMT), are around $5 billion including the effect of expected future tax credits (ITCs). Equinor acquired the Empire Wind lease area in 2017. In June 2024, Equinor announced the execution of the Purchase and Sale Agreement (PSA) with the New York State Energy Research and Development Authority for Empire Wind 1 power for 25 years at a strike price of USD $155.00/MWh.
Empire Wind 2?
Last January, Equinor and BP announced they decided to terminate the Empire Wind 2 project, citing inflation, interest rates, and supply chain disruptions. The Northeastern U.S. offshore project promised a potential generative capacity of 1,260 MW. The companies reached an agreement with the New York State Energy Research and Development Authority (NYSERDA) to terminate their Offshore Wind Renewable Energy Certificate (OREC) Agreement. They said this arrangement reflects changed economic circumstances on an industry-wide scale and repositions an “already mature” project to continue development under a new agreement.
But the project was already on the chopping block after the New York State Public Service Commission denied petitions filed by a group of developers and a state renewable energy trade association seeking billions of dollars in additional funding from consumers for four proposed offshore wind projects and 86 land-based renewable projects.
Offshore wind for the Big Apple
Empire Wind 1 was part of New York’s fourth offshore wind solicitation, following the announcement of a swap transaction between Equinor and BP under which Equinor would take full ownership of the Empire Wind lease and associated projects, including SBMT. BP, on the other hand, took full ownership of Beacon Wind and its assets.
New York ultimately chose Empire Wind 1 and Sunrise Wind, a planned 924 MW project developed by Orsted and Eversource, in that solicitation round. Empire Wind 1 and Sunrise Wind were both previously awarded by NYSERDA in 2019 as part of NYSERDA’s first offshore wind solicitation.
The 73-acre SBMT will serve as the operations and maintenance (O&M) hub for Empire Wind 1 and will be the site of the project’s onshore substation. A low-emissions facility with solar power and EV charging stations installed onsite, the port will provide onshore power and charging for the Empire Wind Service Operations Vessel, the first plug-in hybrid vessel for the U.S. offshore wind industry. Equinor broke ground on construction at the SBMT in June 2024. The 73-acre construction project will create a staging and pre-assembly site for the turbine components of Empire Wind 1 and includes an onshore substation to connect 810 MW of wind power to the Gowanus substation, making Empire Wind 1 the first offshore wind project to connect directly to the New York City grid.
Additionally, in June 2024 Equinor announced the execution of the Purchase and Sale Agreement (PSA) with the New York State Energy Research and Development Authority for Empire Wind 1 power for 25 years at a strike price of USD $155.00 /MWh.
Rough waters in the industry
It’s no secret that the US offshore wind industry has been struggling to get the ball rolling, and Donald Trump’s re-election has only added more uncertainty into the mix. The election has already thrown a wrench into one major offshore project and stands to threaten the rest. In campaign appearances, Trump railed against offshore wind and promised to sign an executive order to block such projects.
Trump has railed against offshore wind turbines spoiling the view from a golf course he owns in Scotland. However, numerous environmental groups say the real reason he opposes offshore wind is his support for the fossil fuel industry. Trump is unlikely to end current projects but might have more leverage over ones still in the planning stage, those in the debate say.
“We are going to make sure that [offshore wind] ends on Day 1,” Trump said in a May 2024 speech. “I’m going to write it out in an executive order. It’s going to end on Day 1.”
Vineyard Offshore, the developer behind Vineyard Wind 1 and 2, just recently said it is pulling the 1,200 megawatt (MW) Vineyard Wind 2 out of contract negotiations after Connecticut decided not to purchase the remaining 400 MW still up in the air. Massachusetts had previously elected to acquire 800 MW from Vineyard Wind 2, but the project’s future was dependent on Connecticut picking up the rest.
Additionally, a New Jersey offshore wind project is seeking a second delay, saying it still can’t find someone to build crucial equipment for the turbines in the latest patch of turbulence striking the industry. Leading Light Wind had already received one pause on its project from the New Jersey Board of Public Utilities, which acknowledged the difficulty the project has had in finding a manufacturer for the blades that would spin to generate electricity. But that pause ended on Dec. 20. The day before, Leading Light asked the board for an additional stay, this time through May 20.
It did not specify an inability to find a blade manufacturer as the reason for needing a second delay, but its most recent request said, “The offshore wind equipment market continues to experience significant price volatility and the company has not yet identified a solution to that volatility.” The project, from Chicago-based Invenergy and New York-based energyRE, would be built 40 miles (65 kilometers) off Long Beach Island and would consist of up to 100 turbines, enough to power 1 million homes.
The U.S. offshore wind industry, while making leaps and bounds in some areas, has been muddled in misfortune in recent years. A recent report released by the American Clean Power Association (ACP) projects about 14 GW of wind capacity offshore U.S. coastlines by 2030, significantly shy of the goal of 30 GW set by the Biden administration in 2021.
The 2024 Offshore Wind Market Report projects $65 billion will be invested in offshore wind projects by 2030. There are currently 12 GW of projects with active offtake agreements, including 4 GW under active construction at Vineyard Wind, Revolution Wind, and Coastal Virginia Offshore Wind. China is the global leader in offshore wind capacity, with nearly 38 GW. There is merely 174 MW of offshore wind capacity currently installed in the United States as of June 30.
According to the report, there is 56 GW under development across 37 leases in the United States. Market analysts forecast 30 GW deployed by 2033 and 40 GW online by 2035, quickly making up ground behind the assumedly missed 2030 goal. These outlooks build on the 7.6 GW of offshore wind projects seeking to be operational by the end of 2027, per ACP.
Increasing material costs, high interest rates, and supply chain snags have led multiple offshore wind companies in the last few years to cancel or renegotiate power contracts for planned offshore wind farms. The U.S. Energy Information Administration is tracking offshore capacity, noting totals are in flux after Orsted canceled Ocean Wind 1 and 2 in New Jersey late in 2023.
This article contains reporting from the Associated Press.
