The next solicitation from the state of New York for offshore wind capacity should be released later this year, despite difficulties caused by Covid-19, but concern is growing that without federal action subsequent solicitations might suffer from a lack of competition
Speaking during the US Offshore Wind Virtual Conference on 18 June 2020, New York State Energy Research and Development Authority president and chief executive Alicia Barton said she was confident that the delayed solicitation would be held later this year and that there would be “very strong” competition from developers.
But in the longer term, said Ms Barton, NYSERDA remains concerned that such is the scale of New York’s ambitious target for offshore wind capacity, that it will become progressively more difficult to hold competitive solicitations without more offshore lease auctions being held by the Bureau of Ocean Energy Management (BOEM).
“We have been extremely clear about the need for more lease auctions in the New York Bight,” Ms Barton said. She said NYSERDA does not have any concerns about a “robust competition” for the upcoming solicitation, but like officials in nearby New Jersey she feels there is a clear need for substantial new lease areas if subsequent solicitations are to be as competitive as the first New York auction.
“At some point, new lease areas will become critical,” Ms Barton said, and states “urgently need” the federal government to bring new lease auctions forward to drive competition.
Ms Barton echoed concerns of developers who do not already hold leases, such as EnBW, whose North America president Bill White told the IPF Virtual Conference earlier this year that a dearth of lease areas and projects able to bid into solicitations could mean 2020 could be the last opportunity the state of New Jersey has for a competitive auction.
In the US, the offshore wind development process starts with lease auctions held by BOEM. Leases are awarded to developers so they can develop projects that are then bid into solicitations from states.
Industry leaders have been urging BOEM to line up more lease auctions for offshore wind in 2020 and hold lease auctions steadily after that. But no offshore wind auctions were held in 2019, and only two are on the horizon in the foreseeable future. A long-term pipeline of lease opportunities is essential to provide the basis for new projects to be developed and bid into upcoming solicitations.
Mr White said new lease areas are also essential to drive competition in the offshore wind market in the northeast US, ensuring states get projects that meet their needs and avoid the possibility that a monopoly might develop in the region because of the dearth of projects ready to bid in auctions after 2020.
Speaking at the US Offshore Wind Virtual Conference, BOEM acting director Walter Cruickshank acknowledged that state interest in developing offshore wind continues to grow. He said the agency was “at the planning stage” of developing new lease auctions in a number of areas but did not provide a timescale for those lease auctions.
Ms Barton said no major changes are expected in the way the 2020 New York solicitation is structured, compared to the highly successful earlier solicitation, but NYSERDA may focus more closely on transmission systems, given that grid connection from offshore windfarms to the state will become progressively more challenging as more and more capacity is built. As more offshore wind capacity is brought online, she said, upgrades to transmission infrastructure onshore might be required, or different approaches to offshore transmission might be required by developers.
She also highlighted recent changes to the electricity market structure in the US that could affect offshore wind’s ability to participate in the capacity market. It has been suggested that offshore wind is unlikely to clear in the capacity market under new bidding rules instigated by regional transmission operators (RTOs) such as PJM. Ms Barton said NYSERDA would continue to engage with the RTOs on the issue.