New York’s rejection of requested increased PPA prices by offshore wind developers leave state’s climate targets at risk

October 18, 2023
 | 
2 min read
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New York has turned down four offshore wind projects’ requests for increased PPA prices. It is now up to the project developers – Ørsted and a partnership between BP and Equinor – whether they accept the original prices or terminate their PPAs.

These four projects total 4.2 GW and make up almost all of New York’s offshore wind portfolio. If the projects are terminated it will leave a massive gap towards New York’s target of 9 GW offshore wind by 2035. However, the deciding authority, New York’s Public Service Commission (PSC), emphasized that “these projects are not everything” and “they do not represent the entirety of our efforts to fight climate change”.

Termination of PPAs on the US East coast would not be new. In the last four months, tree projects totaling 3.2 GW have walked away from contracted PPAs due to inflation, supply chain disruptions and high interest rates:

  • In early October, Avangrid walked away from an offtake deal with Connecticut for its 800 MW Park City project.
  • This summer Avangrid dropped the #Massachusetts PPA for the 1.2 GW Commonwealth project.
  • Shell and Ocean Winds also terminated a Massachusetts PPA this summer for their 1.2 GW SouthCoast project.

New York’s decision to reject the projects’ requests for renegotiating prices sends a signal to offshore wind developers that a deal is a deal. PSC has stated that increasing prices would break the precedent of the competitive procurement process.

The state’s firm stance on contacted PPA prices could also send a signal to developers participating in New York’s third PPA auction, which is expected to be concluded by end of 2023. The unwillingness to renegotiate contracted PPAs will likely be part of the participating developers’ considerations.

Aegir Insights Market Intelligence

Are you interested in a more detailed analysis of the situation in the Northeastern US including the status of various PPAs, after New York having turned down the request for increased PPA prices?

At Aegir Insights we have analyzed the implications of the PPA troubles in New York – both for New York, the neighboring states and the wider US sector in a newly released, subscriber-access Market Insights report.

Reach out to us here to learn more about the implications of New York turning down increased PPA prices and Aegir Insights’ market intelligence service.

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Aegir Insights provides industry-leading intelligence powered by data science for offshore wind energy developers, governments and financial institutions.

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