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NYSERDA cites tax credits, downward cost trends in push for next 2020 offshore wind procurement round 

Related Documents:

NYSERDA Petition

Climate Leadership and Community Protection Act

NYSERDA Offshore Wind Report

 

By Elana Knopp

New York is hoping to fast-track its offshore wind development as it prepares for its next round of solicitations.

The New York State Energy Research and Development recently filed a petition with the state’s Public Service Commission to authorize the agency to solicit at least 1,000 MW of offshore wind in 2020, citing the extension of the federal Investment Tax Credit (ITC) and downward cost trends as part of the push for the solicitation. This second round of solicitations follows NYSERDA’s 2018 solicitation, which resulted in contracts for 1,700 MW of offshore wind. 

The move sends a strong signal that New York will continue to position itself as a leader in the U.S. offshore wind industry, with clean energy agency citing the solicitation as both “warranted and necessary” to maintain New York’s trajectory in meeting its clean energy mandates. 

According to NYSERDA, offshore wind represents a USD 70bn capital expenditure opportunity to businesses in the offshore wind power supply chain over the course of the next decade.

"Top-tier manufacturers and suppliers are actively building detailed plans for investments in the region, but are still hesitant in the short-term as they look to confirm project pipelines to lock in their investments," the agency said in its petition. "New York’s commitment to issuance of another competitive opportunity in early 2020 will encourage developers and their suppliers to take the long view in a market that supports economic development.”

Last year, Congress passed the tax extenders package, which reduced the ITC and did not include an extension of credits for offshore wind facilities. It did, however, extend the ITC in lieu of the PTC for wind facilities starting construction in 2020. The package also extended the PTC phasedown for renewable energy projects until the end of this year but will allow for only a partial recoupment of credits.

Brandon Burke, Policy & Outreach Director for the Business Network for Offshore Wind (BNOW), told New Project Media that the ITC is key to moving New York's robust offshore wind industry forward.

“In 2019 alone, American states up and down the East Coast secured approximately 7,000 MW of offshore wind capacity,” Burke said. “This dramatically-expanding market shows that states are committed to offshore wind as a mechanism to combat climate change and green their electricity supplies. The phaseout for the ITC only places greater importance on that state-level leadership and cooperation on offshore wind. The Business Network for Offshore Wind supports both extending and increasing the federal renewable energy tax credits, especially the up-front investment tax credit, because the ITC is particularly effective for the capital-intensive offshore wind industry."

BNOW anticipates that per MWh costs and U.S. offshore wind prices will continue to drop. 

Last year, the Mayflower Wind project publicly stated that its price came in below USD 84.23 per MWh, while Connecticut’s Department of Environmental Protection (DEEP) described the Park City Wind project price as lower than any other publicly announced offshore wind project in North America. 

NYSERDA is also hoping to align the latest offshore wind solicitation with the state's recently-announced financing options, expected to further drive down costs. The new price structure will now allow bidders to offer either a Fixed or Index Offshore Wind Renewable Energy Certificates (OREC) bids. Instead of the traditional fixed-price structure the agency had been offering developers, the agency will now be able to compensate developers for the environmental attributes of a wind farm associated with its generation output, based on a reference market index that will change monthly over the life of the contract. 

The last few years have seen an unprecedented expansion of New York’s legislative and regulatory efforts to combat climate change and promote the development of a clean energy economy.

Last year, Gov. Andrew Cuomo signed of the Climate Leadership and Community Protection Act (CLCPA), which nearly quadrupled the State’s offshore wind target to 9,000 MW by 2035. New York also committed to investing USD 200m in port infrastructure to unlock private supply chain capital and maximize the long-term economic benefits to the state from the regional development of offshore wind.

The State simultaneously announced the single largest renewable energy procurement by any state in U.S. history—nearly 1,700 MW—with the selection of Equinor Wind US LLC for its 816 MW Empire Wind Project and Sunrise Wind LLC (a joint venture of Ørsted A/S and Eversource Energy) for its 880 MW Sunrise Wind Project.

The awarded projects are expected to spur New York's clean energy industry with USD 3.2bn in combined economic impacts to upstate, downstate and Long Island, more than USD 85m in investments in long-term port facilities and technologies, and are expected to deliver more than 1,600 direct new jobs.

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