NYSERDA Requests PSC Authorization to Procure at Least 1,000 MW of Offshore Wind Capacity in 2020

By Henry E. Myers and Dan Chorost

On January 28, 2020, the New York State Energy Research and Development Authority (“NYSERDA”) submitted a petition to the New York State Public Service Commission (“PSC”) seeking authorization to issue a solicitation to procure between 1,000 and 2,500 megawatts (“MW”) of additional offshore wind capacity this summer. This procurement, which Governor Andrew M. Cuomo directed in his 2020 State of the State address, would significantly advance New York’s nation-leading goal of having 9,000 MW of installed offshore wind capacity by 2035.

NYSERDA’s proposal seeks to build on the successes of its 2018 Phase 1 solicitation, which resulted in contracts for the procurement of nearly 1,700 MW of offshore wind renewable energy certificates (“ORECs”). The Phase 1 procurement was accomplished pursuant to the framework set forth in a 2018 PSC Order, and culminated last October with NYSERDA executing contracts with Equinor Wind US LLC for its 816 MW Empire Wind project, and with Sunrise Wind LLC for its 880 MW Sunrise Wind project.

In last week’s petition, NYSERDA proposes that Phase 2 hew closely to the Phase 1 framework. Bids from offshore wind developers would continue to be evaluated on a scale weighting of 70% price, 20% economic benefits, and 10% project viability. NYSERDA would also continue to accept proposals for direct radial connections from new projects into the New York market, despite the PSC Order’s existing directive that the State consider a multi-project backbone transmission system for this upcoming Phase 2. In addition to increasing the minimum capacity sought from 800 MW in 2018 to 1,000 MW in 2020, the proposed Phase 2 includes other notable changes, for example, the consideration of bids using either Fixed ORECs (with pre-determined prices) or Index ORECs (with adjustable prices) instead of both, and the recommendation to alter the Index OREC structure to rely on inputs reflecting location-based energy and capacity prices specific to the project’s designated zone in an effort to continue improving cost effectiveness.

In support of proposing this larger procurement for 2020, NYSERDA cited the State’s Climate Leadership Community Protection Act, which codified New York’s 9,000 MW offshore wind goal; the success of the Phase 1 solicitation; the need to ensure a competitive solicitation with multiple eligible bidders as other states vie for capacity within the limitations of the existing available wind energy areas and leases; the importance of a procurement commitment to encourage the development of a local supply chain; the availability of federal tax credits; and Governor Cuomo’s 2020 State of the State directive. This larger solicitation would help support the growing momentum of offshore wind development in New York State, even as delays persist at the federal level.

For more information about state and federal offshore wind activities, contact Dan Chorost, Elizabeth KnauerJeff Gracer, or Katie Ghilain.