Equinor, a Norwegian energy company, and its partner BP, have requested a substantial 54% increase in the price of power generated at three planned offshore wind farms in the United States. This request was filed with the New York State Public Service Commission, and it pertains to the Empire Wind 1, Empire Wind 2, and Beacon Wind wind farms, collectively capable of producing 3,300 megawatts of electricity, sufficient to power millions of homes.
The New York State Energy Research and Development Authority (NYSERDA) recently disclosed the partners' petition, shedding light on the proposed price adjustments. Specifically, the strike price for Empire Wind 1 would surge from $118.38 per megawatt hour (MWh) to $159.64/MWh, while for Empire Wind 2, it would jump from $107.50/MWh to $177.84/MWh. Beacon Wind's strike price would witness a substantial increase from 118.00/MWh to 190.82/MWh.
Equinor and BP have defended their request by citing various factors that have driven up costs. They pointed to rampant inflation, disruptions in global supply chains, rising interest rates linked to the COVID-19 pandemic, the Russia-Ukraine conflict, and the escalating pace of the global energy transition.
In contrast, Denmark's Orsted, facing similar pressures, recently announced the possibility of booking impairments amounting to 16 billion Danish crowns ($2.3 billion) on its U.S. wind portfolio, which led to a sharp decline in the company's share value.
As for Equinor, it has not disclosed any impairments related to its U.S. offshore wind ventures. A spokesperson for the company emphasized the importance of ensuring the economic viability of their projects, including Empire Wind and Beacon Wind, but refrained from commenting on the specific pricing details presented by the New York regulator.
Responding to the partners' petition, a coalition representing New York's largest energy consumers expressed concerns that the proposed price adjustments could result in an additional cost of $14.8 billion for consumers over a 30-year contract period. The coalition urged the commission to reject the request, highlighting their skepticism regarding the notion that the projects might be abandoned if the price increase isn't approved.
