US Offshore Wind (OSW) Year in Review
July 20th: Confirming that contract pricing difficulties aren’t limited to the US, Vattenfall announced that it had paused the development of its 1.4 GW Norfolk Boreas project given escalation in costs. Vattenfall subsequently sold the project to RWE, which indicated that it’s moving forward with the project as well as Norfolk Vanguard East and West, which are economic at higher announced UK contracts for difference (CfD) prices. The higher UK CfD pricing indicates that policymakers are recognizing the need for higher pricing.
August 29th: BOEM’s Gulf of Mexico auction awards one lease to RWE for the Lake Charles lease with a $4.3 million cash bid. An uncertain path to market and political animosity towards OSW in Texas resulted in no bids on the two Texas leases. These factors along with changes in the perceived risk of OSW caused many to sit on the sidelines.
October 4th: The three Southern New England states (MA, CT and RI) entered into a MOU regarding collaborating on their forthcoming OSW procurements. With a total target of 6.8 GW, the RFPs offer opportunities for bidders to develop larger, more cost-effective projects and the states to diversify their procurement risks.
October 7th: Governor Newsom signed a bill that authorizes the California DWR to serve as a central procurement entity to meet the state’s clean energy and reliability goals. Eligible resources include OSW. The PUC can authorize DWR to act as a central procurement agency if state energy planning demonstrates a need for the resources. This is a concrete example of political will being used to address gaps in the path to market.
October 12th: The New York PSC denied the petition to authorize NYSERDA to amend its contracts for ORECs, wherein 4 OSW projects requested higher contract prices. Later that day Governor Hochul announced a 10-Point Action plan to support large-scale renewables in New York, recognizing the impact of the PSC’s decision. The Action Plan calls for accelerated procurements for OSW.
October 24th: New York provisionally awards contracts to 3 OSW projects offering 4 GW at an average nominal strike price of $145/MWh, a new price benchmark about 30% higher than earlier NYSERDA OSW contracts.
October 31st: Orsted cancels Ocean Wind 1 and 2 and takes a $5 billion earnings impairment citing a delay in its Jones Act installation vessel and the resulting knock-on effects to existing contracts that would need to be repriced. Orsted also announces final investment decision for the 704 MW Revolution Wind project.
November 29th: New Jersey Governor Murphy directs the BPU to accelerate its next OSW solicitation with the launch in early 2024, suggesting the state's commitment to offshore wind hasn’t waivered.
November 30th: NYSERDA launches its 4th OSW solicitation providing an opportunity for expedited submission of proposals and allowing 4 OSW projects that weren’t allowed to reprice their contracts to rebid.
