November 15, 2019
New York

Weighing the cost off offshore wind

Emily Burkhard | WNYT-TV | November 14, 2019 |

You may have heard New York state is investing billions in two offshore wind projects off the coast of Long Island, but did you know more than half of that money will come from upstate New Yorker’s electric bills? The Capital Region will see economic benefits, but many other Upstate communities won’t.

The New York State Energy Research and Development Authority or NYSERDA said developers selected for the first two offshore wind farms in will be investing $3 to 4B in each project.

The two offshore wind farms will be located about 20 miles off the coast of Long Island.

The projects will produce enough electricity to power 1.2 million homes when completed in 2024.

NYSERDA said investing in offshore wind is key in achieving a 70 percent clean electrical grid by 2030 for two reasons.

First, the New York City and Long Island areas have seen growth in the demand for electricity. According to NYISO, since 2000 about 43 percent of the state’s increased electrical demand came from those areas alone.

Second, 70 percent of the energy used downstate is produced from fossil fuels, compared to just 11 percent for the rest of the state.

NYSERDA President and CEO said investing in offshore wind will also put New York at the forefront of an industry that many other states have already shown great interest in.

“New York intends to be at the center of this new industry for clean energy jobs and we are making those investments today to make sure we can capitalize on the opportunity,” Barton said.

Some of those jobs will be created in the Capital Region. Equinor, the developer selected for Empire Wind project, has agreed to use the Port of Coeymans to manufacture the gravity based foundations for the turbines.

Orsted and Eversource, the developers for the Sunrise Wind project, are looking at a manufacturing contract with the Port of Albany.

NewsChannel 13 spoke with CEO Richard Hendrick about the proposed 80 acre expansion.

“We have a perfect scenario with the river and the harbors that are in close proximity to us,” Hendrick said. “We are working with a green piece of land so we can start from scratch and just develop what we need to be able to fit a prospective tenant, manufacturing facility on this land.”

Megan Daly is the Port of Albany’s Director of Economic Development and Procurement. She said when they initially looked at expanding, they weren’t thinking about accommodating offshore wind.

Daly said with a regular development scenario the port was looking at creating 600 to 900 jobs with $200 to $300M in annual economic impact.

“But with the offshore wind it jumps that number up so as much as 1,600 new jobs and as much as $450M of annual economic impact,” Daly said.

“We are looking at a minimum of 25 years out with the economic benefits that will be to this entire region of Upstate New York,” Hendrick said. “Both in jobs and taxes to local governments.”

Opponents say offshore wind is still the most expensive form of renewable energy and this plan does nothing to immediately reduce carbon emissions. Plus, 88-percent of New York’s electric grid is already produced by clean resources.

So why is NY investing in offshore wind? For one, a piece of legislation called the Climate Leadership and Community Protection Act, passed by both houses of the state legislature in the last two days of the 2019 session, requires 9GW of offshore wind energy to be installed in New York by 2035.

Ken Girardin, a policy analyst with the Empire Center for Public Policy, said he believes there’s a reason why offshore wind requirements were written into the legislation.

“If you really were looking for the most efficient way to reduce carbon omissions it’s not exciting,” Girardin said. “You don’t get to build really big turbines, you have maybe a few more power lines from Canada but it wouldn’t be the same kinds of transformational things that you announce jobs at the port or do favors for the political supporters down in Long Island and New York City.”

However, Barton argues costs have fallen significantly.

“These projects already have blown us away with the fact that they are much lower than we anticipated just a year ago in terms of what the prices would be,” Barton said.

“Just because the cost of a Porsche has come down doesn’t mean that’s the best way for me to get to and from work,” Girardin said.

To make offshore wind energy costs competitive with fossil fuels NYSERDA has worked out contracts with the developers. The contracts require every utility company in New York to purchase ORECs.

The utility companies pass those costs along to ratepayers across the state. Fifty-three percent of the subsidies will be collected from ratepayers outside Long Island and New York City. The money then goes back to NYSERDA to offset the offshore energy development costs.

The Climate Leadership and Community Protection Act gives the New York State Public Service Commission and NYSERDA the power to set OREC rates.

In October when the rates were announced, Barton said they came in about 40 percent lower than expected. NYSERDA said the average New York ratepayer should expect to see a $0.73 increase per household per month once the offshore wind farms are operational, which will likely be in 2024.

NYSERDA said the 25 year contracts with Empire Wind and Sunrise wind are valued at $1B and $1.2B respectively.

Girardin believes the cost to you and your family will actually be much higher than $0.73 per month. He believes the NYSERDA estimates use obscure metrics to determine the contract values and they don’t factor in inflation.

“It’s something in the neighborhood of $6 billion over the 25 year life of these contracts,” Girardin said.

Taxpayers are also likely to cover increased operating costs for school districts and local governments. Hospitals and manufacturers will also likely need make up the increased electrical costs from consumers.

Once you are being charged for the ORECs, you won’t notice a line item on your utility bill. Instead, you’ll have to go to NYSERDA’s website to look up the estimated direct cost to you because the PSC chose to have OREC cost lumped in with the utility and delivery charges.

The cost of offshore wind on your utility bills

Girardin also points out this is also just the first round of offshore wind farm development. We can expect to see more OREC subsidy costs added to our bills as the next phases of offshore wind projects are rolled out.

“So we’re seeing roughly 1/5 of them being built now. All of that money is going to come from utilities collecting extra money and the Cuomo administration deciding where it goes,” Girardin.

Barton said being one of the first states to develop offshore wind will make New York state ports and employees more attractive for jobs in other areas. She also said the projects will provide approximately $700 million of avoided health impact benefits.

“When you put the costs alongside the benefits it’s really a much more balanced comparison,” Barton said.

NewsChannel 13 reached out to each utility company in New York for comment, Central Hudson was the only company with a response.

The company shared data showing that by 2025 New Yorkers will already have paid $1.3B in subsidies for other Renewable Energy Credits (RECs), like solar and onshore wind.

Over the next 25 years, New York ratepayers will contribute almost double that, another $2.2B for just the first phase of offshore wind subsidies.

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