Which Way the Wind is Blowing in the Empire State

New York Wind Farm Dreams are Being Smashed by Blow After Blow

installing the 3rd blade for 1st wind tower in New York’s South Fork Offshore Wind Project

New York Governor Hochul’s Nov.20 press release is chock full of glowing excitement and praise for the completion of the first wind turbine of this 12 tower project, as if things are going wonderfully smoothly. However, there’s an ill wind blowing across the whole idea of getting renewable energy from wind farms; especially offshore wind farms.

Allen Brooks’ Energy Musings throws cold water on the prospect of this project ever becoming successful. Following are selected excerpts from his post, with a little editing of my own:

After delivering a devastating blow to the offshore wind and renewable energy industries in October, (by rejecting several wind farm projects’ requests for bigger subsidies) the New York State Public Utilities Commission has accelerated its efforts to repair the damage.  By having their huge rate increase requests rejected (on average offshore +48% and onshore +71%), developers were forced to rethink their plans for moving forward…

map of all the glorious plans for offshore wind farms off the East Coast

New York Governor Kathy Hochul is worried because of the recent offshore wind project terminations in neighboring New Jersey by Danish developer Ørsted taking 2.3 GWs of offshore wind power out of the state’s pipeline.  One of the four New York offshore wind projects asking for a rate increase that was rejected was Ørsted’s Sunrise Wind, which the company says is being evaluated and considered for rebid or cancellation… David Blackmon’s Energy Transition Absurdities adds “Orsted, which has fallen on hard times financially and appears to be headed on the fast track to bankruptcy unless it receives bailouts from governments in the US, the UK and Germany, where it has invested in an array of offshore wind projects.”

She is also worried about meeting the state’s clean energy mandate.  It calls for getting 70% of the state’s electricity from renewable energy by 2030 and to have 9 GW of offshore wind generating capacity online by 2035.  The latter goal requires the state to build on average 818 megawatts of new offshore wind capacity per year starting next year.  Only the 132-MW South Fork Wind Farm is under construction, which will deliver power to Long Island at the end of 2023 or in early 2024.  Several projects are in the approval process.  However, New York is way behind in meeting its 2035 target…

Governor Hochul was one of the six East Coast governors who submitted a plea to the Biden administration to do more to help offshore wind developers.  Industry events have overtaken that plea and conditions appear to be worsening.  That would include the huge financial impairments on offshore wind projects taken by developers.  There are also the New Jersey project cancellations and concerns about the viability of others… 

A leading offshore wind equipment supplier – Siemens Energy – has asked for and just received $16 billion in financial guarantees and support from the German government, its parent company, and various banks.  Without that support, the company was heading toward bankruptcy.  The German government cited the company’s 26,000 German workers as part of the justification for providing support and its need to sustain the industry’s supply chain… 

In the U.S., a $280-plus million wind turbine manufacturing facility targeted for Portsmouth, Virginia was canceled by Siemens Gamesa costing more than 300 potential jobs.  This is a sign of the diminished outlook for wind turbine demand, as well as the precarious financial position the company’s parent, Siemens Energy, finds itself in.  Losing this plant is just another government promise that is evaporating… 

More infrastructure projects spawned by the offshore wind boom are at risk.  For example, the New York rate hike rejection has put numerous wind farms at risk of cancellation, or certainly facing long delays.  That is why the turbine plants and assembly facilities planned for the Port of Albany and Port of Coeymans are being abandoned.  The Port of Albany was the planned location for a wind tower factory that would create 300 jobs.  Between 2021, when the plant was announced, and today, the plant’s $350 million cost has escalated to $604 million.  This cost increase pushed the owner, the Canadian-based Marmen Welcon partnership, to seek additional financial support from the state government.  Gov. Hochul turned down the request.  Subsidy pockets are only so deep… 

 The turbine towers were targeted to supply Equinor’s Empire Wind project which is now in jeopardy of cancellation following the rate hike increase rejection.  The Port of Albany plant will need new projects quickly, which probably explains the accelerated offshore wind approvals and new solicitation.  Without them, the Port of Albany development will likely not advance.  But even then, without additional financial support, the plant may be “unfinanceable” just like offshore wind farms.  Given the uncertain pace of offshore wind projects and the timing of future ones, the justification for plants to supply wind turbine components will be questioned.  Who wants to build a plant that isn’t used or not used for years? 

One has the sense that the political pressure is high for New York, and likely other East Coast states, to come to the aid of offshore wind and other renewable energy projects.  We are sure the governors were counting on the federal government to come to the rescue, but that was not realistic.  The narrative that offshore wind would always become cheaper has been destroyed.  In a world of higher interest rates, and likely a higher sustained level of inflation, businesses depending on high financial leverage to be profitable will not work.  That is the realization that developers fail to understand, and counting on more subsidies is not a sound strategy.”