Equinor and bp have announced an agreement with the New York State Energy Research and Development Authority (NYSERDA) to terminate the Offshore Wind Renewable Energy Certificate (OREC) Agreement for the Empire Wind 2 project, an offshore wind project in the U.S. with potential generative capacity of 1,260 MW.
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.
“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.”
The Empire Wind 1 and Empire Wind 2 projects recently reached a key federal permitting milestone, having received the federal Record of Decision from BOEM; last month, Empire Wind 1 also received its Article VII Certificate of Environmental Compatibility and Public Need in New York.
Canceled Contracts
Empire Offshore Wind had cancelled one of the contracts awarded to Seatrium Limited for the engineering, procurement, construction, offshore hook-up, and commissioning of two offshore substation platforms (OSS) for the Empire Wind 1 and 2 offshore wind farms located about 20 miles south of Long Island east of the Rockaways.
The contract for the 1,260 MW OSS platform (Empire Wind 2 OSS platform) worth more than $188 million was declined due to significant macroeconomic conditions impacting the Empire Wind 2 project.
The OSS platform’s construction is expected to commence only in June 2024, with minimal engineering work performed.
Seatrium will gain construction capacity set aside for this project to other projects in the pipeline. The contract is based on progressive payment milestones and payment for the work performed till date is received, resulting in neutral project cashflow.
The cancellation of this contract is not expected to have financial impact on the earnings per share and net tangible asset per share of the Group for FY 2024.
On the other hand, construction on the 810 MW Empire wind 1 OSS Platform has started in Q4 2023.
The Empire Wind 1 project contract is unaffected and will continue as planned.
