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United States

New York test water for developer interest building offshore projects on Great Lakes

NORTH AMERICA: Last month, the New York Power Authority (Nypa) issued a request for proposals (RFP) to gauge developer interest in building an offshore wind project in Lake Erie or Lake Ontario, both of which border New York to the north-west.

The power authority wants to see a variety of proposals by next June for wind projects between 120 MW and 500 MW, including projected costs. If the plan proceeds, Nypa would provide the winning developer with a long-term power purchase agreement, widely considered the largest hurdle in getting an offshore wind plant built in the US.

 

 

The central question for prospective developers is whether the power authority understands the costs of offshore wind and whether it will follow through awarding a contract at the high rates that would support private financing of project construction.

Abandoned first attempt

A look at New York's history trying to support an offshore wind project suggests the high costs are known to Nypa's leadership and other stakeholders. Richard M Kessel, the authority's current president and chief executive, was the driving force behind New York's first effort for a state-sanctioned offshore wind project.

Before taking a job at Nypa, Kessel led the Long Island Power Authority (Lipa). In 2003 the public agency was pushing to support construction of a wind project off Long Island, New York, in state waters.

After some bidding between developers, FPL Energy (since renamed NextEra Energy) in 2004 was awarded a bid to build a 140 MW project. But two years later its cost projections more than doubled from around $356 million to around $800 million. Around this time, Kessel left Lipa. His replacement, Kevin Law, then scuttled the plan citing the much higher than anticipated costs. The idea has since been relegated to one of ongoing studies but no major action.

Vote of confidence

This history, however, should give some comfort to wind developers that it is worth the effort to engage again with a state agency promoting an offshore wind plant. "I have every confidence that Richard Kessel will go forward with it," says Carol Murphy, executive director of the Alliance for Clean Energy New York.

"I mean, he was the driving force behind the original Lipa offshore wind project, so Kessel certainly knows what it takes to build an offshore wind project. They know what the costs are."

The new Great Lakes offshore wind plan was announced at an offshore wind conference held by the US wind lobby and the excitement over the idea was palpable, reports Murphy. "The Great Lakes have great wind resources," she says. "I can't answer the developer's questions as to what exactly they would have to see in terms of a power contract they would need to go forward with it, but there were an unbelievable number of people at the offshore wind conference and there are a lot of people interested in the idea."

Companies are instructed to submit a notice of intent by March 20, questions will be accepted until April 9 and the due date for detailed proposals is June 1. A winning project could be awarded by December.

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