The federal government on Monday completed an environmental review of Sunrise Wind, with new recommendations that the offshore project with energy destined for Long Island includes fewer turbines than originally planned.
That step toward final approval comes as developers Orsted and Eversource are reviewing their options for the project. New York State recently initiated an expedited rebidding of the original 2019 award for Sunrise Wind as part of a plan to address what developers say are spiraling costs tied to inflation and interest rates. New bids for the project are due by next month, and the state has said it will issue new awards in February.
Meanwhile, Orsted and Eversource are making headway on the first federally sited project, South Fork Wind Farm, with power also for Long Island, and held a tour of the facility in waters 35 miles east of Montauk Point last week. Two of 12 planned turbines are producing energy, and the remaining 10 are expected to be online in early 2024, Orsted said.
The federal Bureau of Ocean Energy Management, in a decision issued Monday, said its “alternative” to Sunrise Wind's plan to construct up to 94 wind turbines off the coast of Rhode Island and Massachusetts would reduce the array to fewer than 84 turbines, each of which is more than 800 feet tall.
The change came in response to comments from “government partners, key stakeholders, and the public,” BOEM said, to “accommodate geotechnical feasibility of the project, reduce impacts to benthic habitat and Atlantic cod, and meet the energy needs of New York, Massachusetts and Rhode Island.” Benthic refers to anything associated with or occurring on the bottom of a body of water.
BOEM is expected to issue a final “record of decision” for the project early next year.
The federal government’s advancing of the project comes even as Orsted prepares to review an upcoming and expedited rebidding process for projects previously awarded by New York State. Developers are seeking a higher price for their projects' energy to accommodate recent spikes in interest rates and inflation-stung material costs.
Sunrise Wind is among the projects that had requested an adjustment clause to defray those costs. After the state Public Service Commission declined to grant the adjustment, the state agreed to issue a new expedited request for proposals to allow the companies to rebid.
“We look forward to reviewing [New York State's] forthcoming RFP and appreciate the Hochul administration's swift action to keep New York’s offshore wind ambitions on track,” Orsted and Eversource said in a prepared statement last week. On Monday, the company's said, "While we review the RFP and determine our next steps, we know that mature projects like Sunrise Wind are the only offshore wind farms that can be delivered within the next several years, a timeline that would be critical to meeting the state’s 2030 clean energy targets."
Under terms of the new bid request, those developers holding existing "active agreements" with the state for their projects "must enter into a legally binding agreement that will cause the active agreement to automatically terminate at the conclusion" of the new bidding process, according to a copy of the state bidding papers.
But Orsted has yet to make what it calls a “final investment decision” for Sunrise Wind, which would provide the internal go-ahead by the company to build the project. It is expected to do so by early next year. Land-based construction has begun along the 17.5-mile route between Smith Point and a Holbrook substation, including a receiver station in Holtsville, Newsday has reported.
Orsted officials last month shocked the nascent U.S. offshore wind industry by withdrawing two large offshore-wind projects planned for New Jersey and taking a $4 billion impairment charge for the year — a reduction in the value of assets. The company also wrote down the value of Sunrise Wind by $754 million, among others, according to EnergyWatch.
Mads Nipper, chief executive of Denmark-based Orsted, told financial analysts last month that the company was giving new scrutiny to its entire U.S. portfolio of offshore wind projects, including Sunrise Wind, one of the biggest destined for Long Island at 924 megawatts. Orsted, he said, was taking measures to “de-risk the exposure of the portfolio by reducing the number of projects that will be realized,” Nipper said.
Key to the decision will be whether Orsted can successfully rebid the project to New York State to receive a more favorable cost for its energy. Nipper, who previously placed odds of 75% in favor of a more favorable cost mechanism for Sunrise, lowered that probability to 50% last month, Newsday reported.
All of Sunrise Wind’s proposed 924 megawatts of power — enough for 600,000 of LIPA’s 1.2 million customers — are slated to connect to the LIPA grid at a substation in Holbrook, part of a plan that would see large Long Island fossil-fuel plants retired in coming years.