ALBANY — As a new proposal for an offshore wind project looks likely to trigger a federal auction for development rights, a state agency that was willing to spend big in a previous auction is rethinking its strategy.
German-based PNE has submitted plans for a 400 megawatt offshore wind farm off the coast of Fire Island. The project, submitted to the U.S. Bureau of Ocean Energy Management, would put as many as 50 turbines in the 40,000 acre area.
That’s likely to spark competitive bidding on the area, said Alliance for Clean Energy’s Anne Reynolds, and could move offshore wind along more quickly in New York.
But the New York State Energy and Research Development Authority may not be one of the bidders. The agency said in a statement it “may, but does not expect to” participate in future bidding.
“NYSERDA is executing a strategy to create competition for offtake agreements for areas that meet our standards and provide the best path to cost effectiveness for New York State consumers,” the agency said . “We look forward to working with any successful winning bidder to help us achieve these goals.”
The agency made an aggressive bid in a December auction of 80,000 acres 11 miles off Long Island. But the agency placed second to Norwegian oil giant Statoil, which posted a winning bid of $42 million.
NYSERDA had been willing to spend as much as $36 million to secure the leasing rights. CEO John Rhodes said the state’s plan was to package the leasing rights with all necessary regulatory approvals and an agreement to buy the power.
Gov. Andrew Cuomo has committed to a goal of 2,400 megawatts of offshore wind to supply energy about 1.25 million homes by 2030. NYSERDA is leading the state’s effort with the development of a comprehensive plan to locate multiple projects in the Atlantic Ocean, due out at the end of this year.
“Companies noticed how much Statoil paid for the lease and they definitely noticed the governor’s commitment … and they know it’s a very high-demand place close to New York City,” Reynolds said. “What we need in New York is competition between different offshore wind developers to push down the price and get the best deal for New York.”
PNE cited political support for offshore wind in New York, high electricity costs for energy in Long Island and New York City, constraints of on-shore generation and planned retirements of plants as reasons for its interest. While praising the state’s support for offshore wind, the company’s application says more work is needed.
“PNE is convinced of offshore wind’s long-term potential in meeting New York’s generation needs,” the application states. “Going forward, however, what is essential is developing a viable policy framework and an established process that mandates the procurement of offshore wind capacity in New York, as implemented to date in states such as Maryland and Massachusetts.”
Maryland and Massachusetts have specific requirements for utilities to buy credits from or directly procure offshore wind energy.
New York’s Clean Energy Standard, which supports a goal of 50 percent renewables by 2030, is “agnostic” on technology but requires utilities to buy credits linked to renewable energy projects. Utilities can also directly buy energy from renewable projects, including offshore wind, to lower the amount of credits they must buy.
The PNE project, or one by another developer in the same area, would ostensibly be the third offshore wind farm for New York. The company predicts it could be completed by 2027.
Besides the Statoil lease, which is facing a legal challenge and requires numerous regulatory approvals, the Long Island Power Authority approved a 90-megawatt project off the coast near Montauk in January.
All of this action, with rave reviews from environmental groups, does not come without its detractors. Long Island's commercial fishing industry fears the placement of dozens of wind turbines in waters that have been fishing grounds for hundreds of years will devastate their way of life.
“You don’t destroy the ocean environment to save the environment,” said Long Island Commercial Fishing Association executive director Bonnie Brady. “If they keep selling off these portions of the ocean indiscriminately without determining first where they shouldn’t be going, it’ll be too late… You’ll be bankrupting these coastal communities.”
Brady said the area where PNE wants to build includes fishing grounds for scallops, squid, black sea bass and many other species of fish.
The fishing industry and some coastal municipalities in Long Island have filed a legal challenge to the sale of leasing rights to Statoil. They argue the environmental review should not just consider the effects of building a wind farm but whether other sites would be less harmful to marine life or if it should be built at all. That lawsuit is pending.
NYSERDA has said it plans to consider the concerns of all stakeholders, including the fishing industry, as part of the master plan for offshore wind.
