Equinor ASA has canceled an influence provide settlement with New York state for the Beacon Wind mission and entered a deal to totally switch the lease to associate BP PLC in alternate for the latter’s stake in equally costs-hit Empire Wind, each firms stated.
Norway’s majority-state-owned Equinor and British competitor BP are 50-50 joint venturers in each leases. The swap transaction now restructures possession of the lease for Beacon Wind, which spans Massachusetts and New York, and the lease for Empire Wind, located in New York.
“Beneath the settlement, Equinor will take 100% possession of Empire Offshore Wind Holdings LLC”, Equinor stated in a current information launch. The settlement additionally offers for Equinor’s takeover of BP’s 50 % possession of the South Brooklyn Marine Terminal wind mission, which was agreed on by the 2 and the state of New York in 2022. The terminal transformation mission will function an interconnection station for each Beacon Wind and Empire Wind.
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“BP will take over Beacon Wind Holdings LLC and the related mission firm that holds the Astoria Gateway for Renewable Vitality website and can turn out to be the operator of the Beacon Wind tasks”, Equinor added. The Beacon Wind three way partnership final yr purchased the location of the Astoria Gasoline Generators with a plan to rework it right into a renewable vitality converter station beneath a mission known as Astoria Gateway for Renewable Vitality.
“The settlement offers Equinor and bp with the flexibleness to pursue their respective priorities beneath their company methods”, Equinor stated.
BP stated in a separate assertion, “We stay disciplined with an uncompromised concentrate on worth creation throughout our total offshore wind portfolio as we proceed to pursue progress alternatives that underpin our firm’s transformation”.
Two amenities are deliberate for Empire Wind, set to rise 15–30 miles southeast of Lengthy Island. Empire Wind 1 has a declared capability of 816 megawatts (MW) whereas Empire Wind 2 has a declared capability of 1,260 MW. The mixed capability is sufficient to energy a million New York houses in keeping with Equinor.
Nonetheless, Equinor introduced earlier this month settlement has been reached with New York’s vitality regulator to terminate an earlier settlement for energy provide from Empire Wind 2, citing rising prices and provide chain disruptions.
“This [termination] settlement displays modified financial circumstances on an industry-wide scale and repositions an already mature mission to proceed growth in anticipation of latest offtake alternatives”, Equinor stated in a press launch on the time.
“The choice acknowledges business situations pushed by inflation, rates of interest and provide chain disruptions that prevented Empire Wind 2’s current OREC [Offshore Wind Renewable Energy Certificate] settlement from being viable”.
Following the swap settlement with BP, Equinor stated a bid has been submitted for Empire Wind 1 in New York’s fourth offshore wind solicitation spherical, which closed this week.
“Each Empire Wind 1 and a couple of have been impacted by industry-wide macroeconomic results, and whereas Empire Wind 1 is bidding into the NY4 solicitation, Empire Wind 2 can be matured for future solicitation rounds”, it stated.
Asserting the swap transaction with BP, Equinor additionally stated an settlement has been reached with the New York State Vitality Analysis and Improvement Authority to terminate an offtake deal for the primary of two amenities deliberate for Beacon Wind.
Beacon Wind 1 has a 1,230-MW capability whereas Beacon Wind 2 has a capability of 1,360 MW. Their mixed technology can energy over two million houses within the northeastern US in keeping with BP.
BP and Equinor final yr tied up with over 100 renewable vitality mission builders to file petitions asking the state authorities to revise down costs beneath New York’s renewable electrical energy agreements with the businesses. They failed.
“On a month-to-month invoice foundation, granting the request to amend the executed contracts outdoors the aggressive procurement course of would have resulted in as excessive as 6.7 % will increase for residential prospects and as excessive as 10.5 % for business or industrial prospects on month-to-month payments relying on service territory and the extent of aid offered — above what was already dedicated”, the New York State Public Service Fee stated in its choice launched October.
Because of the swap transaction, Equinor expects round $200 million in losses, an estimate assuming profitable bidding for Empire Wind 1.
In the meantime, BP stated, “Following evaluation of honest worth of bp’s property, bp expects to acknowledge a pre-tax impairment cost of round $0.6 billion referring to bp’s US offshore wind property within the fourth quarter 2023”.
The swap transaction is predicted to shut mid-2024 topic to regulatory approval.
To contact the writer, electronic mail jov.onsat@rigzone.com
