August 19, 2019

August 19, 2019

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New York Approves Major Offshore Wind Energy Deal

As the latest step in New York’s hard-driving clean energy agenda, Governor Andrew Cuomo announced the approval of a major offshore wind energy deal while signing the state’s Green New Deal into law on July 18. Partnering with developers Ørsted and Equinor, the project is estimated to generate 1.7 gigawatts of offshore wind energy in the Atlantic Ocean by 2024. The deal surpassed New Jersey’s recent 1.1-gigawatt transaction to become the single largest offshore wind procurement in the United States to date.

Ørsted and Equinor were selected over Vineyard Wind and Atlantic Shores to complete the offshore wind projects. The two-pronged deal will supply electricity to nearly one million homes throughout the densely-populated areas of Manhattan and Long Island, where there are less options to develop extensive renewable energy resources. The costs of the offshore wind procurements were lower than initially expected, allowing New York to increase the scope of the projects.

Danish wind developer Ørsted will work alongside New England provider Eversource Energy to construct the 880-megawatt Sunrise Wind project thirty miles to the east of Long Island. The offshore wind energy will eventually provide power to several areas of the island. Norwegian developer Equinor will oversee an 816-megawatt project that will deliver electricity to New York City. Following the Governor’s approval of the deals, the developers may now move forward with soliciting long-term contracts with the state of New York for renewable wind energy certificates.

The state of New York first introduced the Climate Leadership and Community Protection Act, or “Green New Deal,” on January 17, 2019, outlining some of the most aggressive clean energy goals in the United States. The simultaneous announcement of the offshore wind energy deal, on the heels of the signing of the Green New Deal, has once against placed New York at the forefront of clean energy initiatives. The new law mandates that New York require 70 percent renewables by 2030, with the hope that the state’s entire electricity system be carbon-free by 2040. The Green New Deal will also seek a reduction in greenhouse gas emissions by at least 85% by the year 2050.

Wind energy will play a major role in achieving the ambitious goals laid out in the Green New Deal. New York will work to quadruple its offshore wind energy production to 9000 megawatts in the next decade, with most of the renewable generation fueling Long Island and New York City. Upon the completion of the offshore wind projects, New York will aim to source at least ten percent of its electricity from offshore wind energy by 2025. The developments will coincide with another $200 million of investment in port infrastructure projects to enhance port facilities in Long Island, Albany, Staten Island and Brooklyn.

Governor Cuomo’s announcement calls attention to the increasingly competitive offshore wind sector, which is predicted to be one of the largest upcoming renewable energy markets around the world. The New York contracts were so desirable to developers that the companies spent several months negotiating and proposing deals before Ørsted and Equinor were ultimately chosen. With Massachusetts and New Jersey also soliciting recent deals, the offshore wind business could potentially increase into an industry worth more than $70 billion along the East Coast in the next decade. Although wind farms are among the most expensive renewable energy resources to construct, costs have decreased in recent years as developers have attempted to gain market share in projects and work to make future projects more cost-effective.

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About this Author

Verna Krishnamurthy, Corporate Attorney, Mintz Law Firm
Associate

Verna’s practice focuses on general corporate and securities laws matters, representing both private and public companies. Verna has experience advising clients in the life sciences, energy and sustainability, and technology industries on a broad range of corporate matters, including corporate formation, venture capital financings, stock and asset acquisitions, capital markets transactions and ongoing securities compliance. Verna also dedicates a portion of her practice to social entrepreneurship and impact investing.

Prior to joining Mintz,...

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