The cost of electricity generated by Sunrise Wind will nearly triple under a rebidding of the project approved by Gov. Kathy Hochul. Citing increased construction costs, higher interest rates, and Pandemic-related supply chain issues, the operator, Denmark-based Ørsted, had requested the rate hike for its $700 million wind farm planned for the waters off Montauk Point.
Local officials support the project both for its planned capacity to serve 600,000 homes with renewable energy and the $170 million promised by Ørsted for permission to land its 123-mile cable connecting the turbines to the mainland. The 924-megawatt project also calls for the construction of a $37 million operations center in East Setauket, a $5 million Research and Development Partnership with Stony Brook University, and a $10 million National Wind Training Center in Brentwood. A turbine service vessel is expected to be docked at Port Jefferson.
Ratepayers will see their bills go up about 2%, or $2.09 per month, under the new cost structure, according to the governor. The previous deal with the state would have seen an increase of only 73 cents per month.
“I promised to make New York a place for the renewable energy industry to do business, and we are delivering on that promise,” Hochul said. “Offshore wind is foundational to our fight against climate change, and these awards demonstrate our national leadership to advance a zero-emissions electric grid at the best value to New Yorkers.”
Energy industry experts eye Gov. Hochul’s green goals with caution, noting that wind and solar have limitations and the state is not backing them up with 24-hour-a-day power sources such as natural gas turbines. Ratepayers are wary of large-scale generation projects having seen the Shoreham Nuclear Power Plant devolve into a multi-billion dollar fiasco without producing any commercial power.
The new rates are a shot in the arm for Ørsted, which is facing turbulence across its wind energy portfolio. Its partner in Sunrise Wind, the New England-based Eversource, has bailed out of the effort along with all of its other wind turbine interests. Last year, Ørsted reported $4 billion in wind losses, while Eversource posted $1.6 billion in impairments.
Gov. Hochul also approved a rate increase for Empire Wind 1, a turbine project 14 miles off Jones Beach proposed by Equinor, a Norway firm that had canceled its other New York project, Empire Wind 2. The U.S. wind efforts are also relying on massive tax breaks from the federal government.
Announcing the rate hikes, Hochul quoted 22 supporters in an eight-page press release including elected officials, union and business groups, and environmental organizations. Tax and ratepayer watchdogs in what has become one of the most expensive states to live in the nation were not mentioned.