Equinor and bp, the developers behind the giant Empire Wind 2 offshore wind project, and the New York State Energy Research and Development Authority have reached an agreement to terminate the Offshore Wind Renewable Energy Certificate (OREC) Agreement for the Empire Wind 2 offshore wind farm project.
The Empire Wind 2 project called for development of an offshore wind farm 20 miles from Long Beach on New York’s Long Island Sound with an offshore wind project in the U.S. with 130 turbines generating 2.1 gigawatts of electricity, or enough to power 1 million homes.
The two companies stated the project was “no longer viable” citing “economic headwinds,” namely inflation, higher interest rates and supply chain disruptions, as the cause of the project’s cancellation.
This agreement reflects changed economic circumstances on an industry-wide scale and repositions an already mature project to continue development in anticipation of new offtake opportunities. The decision recognizes commercial conditions driven by inflation, interest rates and supply chain disruptions that prevented Empire Wind 2’s existing OREC agreement from being viable.
Equinor and bp believe offshore wind can be an important part of the energy mix and are committed to maintaining substantial contributions to the state and local economy.
“Commercial viability is fundamental for ambitious projects of this size and scale. The Empire Wind 2 decision provides the opportunity to reset and develop a stronger and more robust project going forward,” said Molly Morris, president of Equinor Renewables Americas.
“We will continue to closely engage our many community partners across the state. As evidenced by the progress at the South Brooklyn Marine Terminal, our offshore wind activity is ready to generate union jobs and significant economic activity in New York.”
“bp is supportive of NYSERDA’s leadership and commitment to offshore wind, which we believe is a critical part of New York State’s and America’s clean energy future,” said Joshua Weinstein, bp’s president of offshore wind – Americas.
“Offshore wind can deliver reliable renewable power as well as economic benefits to the state and its communities,” he said.
The Empire Wind 1 and Empire Wind 2 projects had recently reached a key federal permitting milestone, having received the federal Record of Decision from the Bureau of Energy Management.
In December, Empire Wind 1 received its Article VII Certificate of Environmental Compatibility and Public Need in New York in December.
The previous month, Danish wind giant Orsted abandoned two major offshore wind projects off the coast of New Jersey, citing similar macroeconomic factors as Equinor and BP.
“The current market situation with supply chain challenges, project delays, and rising interest rates has challenged our offshore projects in the US, and in particular our offshore project Ocean Wind 1,”said Orsted CEO Mads Nipper.
“Therefore, as part of our ongoing review of our US offshore wind portfolio, we’ve decided to cease the development of Ocean Wind 1 and Ocean Wind 2.”
The company said it would cease development of Ocean Wind 1 and Ocean Wind 2, which taken together would have produced about 2,300 MW of electricity.