Why It Matters: New York’s green-energy goals could be hindered.
Gov. Kathy Hochul has pledged to sharply curtail New York’s dependence on fossil fuels. State law requires that by 2030, renewable resources — like sun and wind — must account for 70 percent of the share of electricity consumed in the state.
State law also requires that by 2035 offshore wind farms be able to generate up to nine gigawatts of energy at a given time — up from zero today. That would be enough electricity to power more than six million homes.
Nearly half of that offshore wind would come from four wind farms — known as Sunrise Wind, Beacon Wind and Empire Wind I and II — proposed to be built in the Atlantic Ocean, near Long Island, under contracts with the state. But the developers of those wind farms have recently complained that fast-rising costs and disruptions in supply chains had made the terms of those contracts unfeasible.
They and the developers of 86 land-based renewable energy projects asked state utility regulators to bail them out with increased subsidies. The 90 total projects were already expected to cost the state’s utility ratepayers about $10 billion. The New York Department of Public Service estimated that granting the requests would cost ratepayers an additional $12 billion.
Background: The subsidies had powerful supporters and critics.
The requests created a dilemma for state officials. Influential labor leaders pressed for the subsidies to preserve the jobs the projects could create. But advocates for low-income utility customers argued that too many of them already could not afford their increasing monthly bills.
“The problem is that we have very good goals in place, but in the end, who’s going to pay for it all?” said Bill Ferris, legislative representative for AARP New York, who opposed the requests. “If everyone benefits, it shouldn’t be just ratepayers to foot the bill.”
The contracts for each of the projects resulted from competitive bids. Rory Christian, the chairman of the Public Service Commission, the state’s utility regulator, said that providing relief to the winning bidders would set an untenable precedent. “Taking exception today almost guarantees that we will be asked to do this again in the future,” he said.
Mr. Christian added that the state’s ratepayers, who would have borne the cost, could not serve as an “unlimited piggy bank” for companies to tap. “We have a deal,” he said to the developers, calling on them to stand by the terms they agreed to.
His fellow commissioners unanimously agreed, denying the petitions.
Governor Hochul endorsed the decision, saying it was necessary “to maintain affordability” in an uncertain global economy and make sure New Yorkers “are getting the best deal.”
What Happens Next: Some projects could be canceled.
Having been denied additional subsidies, the developers of the projects will have to decide whether to absorb the higher-than-expected costs or break their contracts with the state.
If they back out of their deals, the state’s Energy Research and Development Authority could put the project contracts up for bids again in a hurry to try to stay on track toward the clean-energy goals. But, given the increases in costs since the contracts were originally let, new deals would likely come with significantly larger price tags.
Fred Zalcman, director of the New York Offshore Wind Alliance, said the commission’s decision “puts these projects in serious jeopardy and deals a potentially fatal blow to the progress these projects have made to localize clean energy manufacturing, reinvigorate New York’s ports and harbors, train and deploy New York’s skilled union workers, and revitalize environmental justice communities.”
Molly Morris, president of Equinor Renewables Americas, a developer of the Beacon and Empire wind farms, said the developers would assess the impact of the denial on the projects. David Hardy, chief executive of the Americas region for Orsted, the Danish developer of Sunrise Wind, said the project would be “extremely challenged without this adjustment.” He said the company’s board and partners would consider their next steps.