like European energy companies Equinor and BP This Wednesday (3) terminated the agreement for Selling energy to New York State Through the proposed offshore wind farm Empire Wind 2. High inflation, rising borrowing costs and supply chain issues were among the reasons for canceling the contract.
“This agreement reflects changing economic conditions across the industry and repositions an already mature project for further development in anticipation of new acquisition opportunities,” Equinor said in a statement, referring to a new offshore wind solicitation launched through New York in November.
The demand allowed companies to terminate old contracts and return to offering projects at higher prices. Winners of the Accelerated Offshore Wind Application will be announced in February.
Representatives for Equinor and BP were not immediately available to say whether they plan to bid on the 1,260-megawatt Empire Wind 2 or 816-megawatt Empire Wind 1 projects in the accelerated New York solicitation.
One megawatt of offshore wind could power about 500 American homes.
The offshore wind industry is expected to play an important role in helping US President Joe Biden and several states, including New York, achieve their goals of decarbonizing the power grid and combating climate change.
But progress slowed in 2023, after outside developers canceled energy sales contracts in Massachusetts, Connecticut and New Jersey, and threatened to cancel agreements in other states, as rising inflation, rising interest rates and problems in the supply chain drove up project costs.
New York accelerated its request in October after several developers, including Ørsted, the world’s largest offshore wind company, BP and Equinor, threatened to cancel power sales contracts awarded in 2019 and 2021, before the Federal Reserve began raising interest rates in March 2022. To combat rising inflation.
New York’s first offshore wind farm, the 132-megawatt Ørsted South Fork, delivered its first power in December.
In Massachusetts, Avangrid and Copenhagen Infrastructure Partners said Wednesday that their 806-megawatt Vineyard Wind 1 project produced the first power for New England’s grid.
Avangrid is majority owned by Spanish energy company Iberdrola.
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