Offshore Wind (File)

Green Energy Companies Look To Renegotiate Contracts With New York As Costs Eat Into Profit

A number of green energy companies and advocacy groups have petitioned the New York Public Service Commission (NYPSC) to renegotiate contracts with state utilities as rising costs could threaten the viability of numerous projects, according to UtilityDive.
Source: Unsplash. By Nick Pope, DCNF.

A number of green energy companies and advocacy groups have petitioned the New York Public Service Commission (NYPSC) to renegotiate contracts with state utilities as rising costs could threaten the viability of numerous projects, according to UtilityDive.

The NYPSC, the state’s utility regulator, is reviewing requests to adjust deal terms for more than 90 offshore wind, solar and onshore wind projects that would sell power to New York and are projected to supply 25% of the state’s load by 2030, UtilityDive reported.

Numerous companies and advocacy groups supporting the developments are seeking to increase the prices of their previously-inked deals to combat rising supply costs and interest rates, with some saying that the costs may threaten the financial viability of their projects if they are not allowed to increase their prices to generate more revenue.

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Orsted, British Petroleum (BP), Equinor, the Alliance for Clean Energy New York (ACENY) and Clean Path New York (CPNY) all filed petitions with the NYPSC requesting permission to renegotiate their contracts on account of these unexpected costs, UtilityDive reported. The spiking costs could threaten the viability of numerous green energy projects that the state is set to depend on for electricity production in the coming years.  

On average, offshore wind developers are seeking to boost their contract prices by 48%, onshore wind companies are hoping to raise their prices by an average of 71% and solar companies are hoping to increase their prices by 63%, according to the New York State Energy Research and Development Authority (NYSERDA).

The requests to increase prices in established offshore wind and other green energy contracts in New York could bump up residential electricity rates by 2.5% and 1.5%, respectively, or a cumulative $4.67 per month, according to NYSERDA. A coalition of New York utility providers has also suggested that the NYPSC make minor changes to contract terms on a project-by-project basis, or that the utility regulator use inflation-sensitive formulas to make adjustments to the deals.

“Like other developers at the forefront of this emerging US industry, Equinor and BP have seen the estimated costs of our projects rise sharply due to inflation, supply chain disruptions, permitting and interconnection delays, rising interest rates and other outside factors,” an Equinor spokesperson told the Daily Caller News Foundation. “While we have worked to manage these issues, given the unique moment in our global economy, this is an industry-wide issue that cannot be overcome at the project level.”

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The problems facing green energy companies in New York may spell trouble for the Biden administration’s climate agenda, which is similar to that of New York. The state’s goals of decarbonizing its electricity production by 2040 and reducing greenhouse gas emissions by 85% relative to 1995 levels by 2050 are slightly less ambitious than the Biden administration’s aim to have the U.S. energy sector reach net-zero carbon dioxide emissions by 2035 and the overall U.S. economy reach net-zero by 2050.

“New York has outlined ambitious targets for clean energy generation and transmission, and the projects that have sought these modifications to their contracts are crucial parts of those targets. If these projects are not able to move forward, yes, it would endanger the goals New York has established,” Anne Reynolds, executive director of ACENY, told the Daily Caller News Foundation.

“The cost to ratepayers is an immense concern,” Reynolds continued, adding that “the need to combat the ongoing climate crisis necessitated the aggressive timeline that New York has established, but the burden of paying for this should not fall entirely on the ratepayers” and that ACENY is “working with [its] legislative partners and like-minded organizations to prevent this from happening.”

Green energy companies have requested that utility regulators across the U.S. relieve them of some inflationary burdens on their projects, including developers in California, Connecticut, Hawaii, Indiana, Maine, Maryland, Massachusetts, Michigan, New Jersey, New Mexico and Rhode Island, according to NYSERDA.

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“Our decision to petition for renegotiation is driven by unrelenting economic challenges and we do not take this step lightly.  “Equinor and BP’s offshore wind projects are on track to power 2 million New York homes with renewable offshore wind power,” a BP spokesperson told the DCNF. “We remain strongly committed to our projects and our partners in New York and are optimistic that together we can find a path forward in the weeks and months ahead.”

Orsted, CPNY, Democratic New York Gov. Kathy Hochul’s office, NYPSC and the White House all did not respond immediately to the DCNF’s request for comment.

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