UPDATE 2-New York awards offshore wind contracts to Equinor, Orsted
(Adds statements by Equinor, Orsted, additional details on projects)
Feb 29 (Reuters) - New York officials on Thursday awarded conditional contracts to buy electricity from two proposed offshore wind projects under a program meant to support the embattled industry and keep the state's ambitious clean energy goals on track.
The state said it had selected the Empire Wind 1 project from Norway's Equinor and the Sunrise Wind facility being developed by Denmark's Orsted and U.S. power provider Eversource.
Once completed, the projects will produce enough electricity to power 1 million homes, the state said. They will be the largest electricity generation projects built in the state in nearly four decades.
The solicitation by the New York State Energy Research and Development Authority (NYSERDA) was being closely watched because it allowed companies to exit old contracts and re-offer projects at higher prices.
The competitively selected projects will enter into contracts to sell Offshore Wind Renewable Energy Certificates (ORECs) to NYSERDA on behalf of New York's electricity ratepayers statewide.
Offshore wind developers have warned that proposed facilities cannot be built profitably because of rocketing construction costs, higher interest rates and supply chain snags.
Both Equinor and Orsted took large financial hits on their U.S. offshore wind portfolios and had sought to charge customers more for power produced by their projects. New York denied that request, instead allowing them to rebid.
"I promised to make New York a place for the renewable energy industry to do business, and we are delivering on that promise," Governor Kathy Hochul said in a statement. "Offshore wind is foundational to our fight against climate change, and these awards demonstrate our national leadership to advance a zero-emissions electric grid at the best value to New Yorkers."
New York has a goal to develop 9,000 megawatts of offshore wind by 2035. Sunrise Wind and Empire Wind 1 will contribute 1,700 MW toward that target.
The companies will now negotiate final terms for the 25-year contracts, which are expected to be executed in the second quarter of this year, they said.
"This is a promising new beginning for Empire Wind 1 and we're ready to get started," Equinor Renewables America President Molly Morris said in a statement.
Equinor's project proposal includes transforming a marine terminal in Brooklyn into a staging and port facility for offshore wind development.
As previously announced, Orsted said it
plans to acquire
Eversource's 50% stake in the 924-MW Sunrise Wind, but the utility will lead the project's onshore construction.
Sunrise Wind is expected to be the nation's largest offshore wind project once it is completed, Orsted said. (Reporting by Ashitha Shivaprasad in Bengaluru and Nichola Groom in Los Angeles, Editing by Franklin Paul and Marguerita Choy)
