Blue state delivers crippling blow to green energy development, jeopardizing Biden's climate goals

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New York's state government rejected requests from a group of offshore wind energy developers who asked to renegotiate existing contracts amid rising prices and inflation.

The New York State Public Service Commission (NYSPSC), the state's main regulator that oversees electric, gas and water utilities, issued the decision late last week, saying it would "preserve the robust competitive bidding process that provides critically needed renewable energy resources to New York." The energy developers had requested billions of dollars in additional taxpayer funding for four proposed offshore wind projects and 86 onshore green energy projects.

"The requested amendments to the contracts would have provided adjustments outside the competitive procurement process; such relief is fundamentally inconsistent with long-standing Commission policy," Commission Chair Rory Christian said in a statement. 

"The Commission has repeatedly stated that competition in the procurement process is necessary to protect ratepayers and provides the soundest approach to mobilize the industry to achieve our critical State goals dependably and cost-effectively, and we do so again through today's action," Christian wrote.

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Wind turbines generate electricity near Block Island, Rhode Island, on July 7, 2022. (John Moore / Getty Images)

The NYSPSC said the rejected request would have resulted in an increase of up to 6.7% in utility costs for residential customers and as much as a 10.5% increase for commercial or industrial customers on monthly bills.

The petition had been filed by Empire Offshore Wind LLC and Beacon Wind LLC, Sunrise Wind LLC, and the Alliance for Clean Energy New York Inc. (ACE NY). Energy companies Equinor and BP are jointly developing the Empire Offshore Wind and Beacon Wind projects; energy companies Orsted and Eversource are developing Sunrise Wind; and ACE NY is a coalition of large energy developers and environmental organizations.

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The petitions from the companies asked the state to adjust renewable energy credit (REC) and offshore wind REC purchase-and-sales agreements they entered into with the New York State Energy Research and Development Authority years ago to address inflationary pressures "impacting project economics."

"The renewable energy industry is deeply disappointed with the Commission’s unfortunate ruling denying relief for renewable energy projects dealing with unprecedented inflation in the wake of the COVID-19 pandemic," said ACE NY Executive Director Anne Reynolds in a statement. "The decision is shortsighted. We were hoping the Commission would act strategically on behalf of ratepayers and the environment; instead, their decision will result in increased costs and greenhouse gas emissions."

"Today's PSC decision denying relief to the portfolio of contracted offshore wind projects puts these projects in serious jeopardy and deals a potentially fatal blow to the progress these projects have made to localize clean energy manufacturing, reinvigorate New York's ports and harbors, train and deploy New York's skilled union workers, and revitalize environmental justice communities," added New York Offshore Wind Alliance Director Fred Zalcman in a statement.

New York Gov. Kathy Hochul (AP Photo / Hans Pennink / File)

Zalcman said the four projects impacted – Empire Wind 1, Empire Wind 2, Beacon Wind and Sunrise Wind – represent almost half of the offshore wind capacity that the New York state government has vowed to achieve by 2035.

The projects, which all remain in the proposed phase, have been under development for years and are all expected to enter operations between 2025 and 2028, producing enough electricity to power millions of homes. Excluding those projects, South Fork Wind, approved by the federal government in late 2021, is the only other offshore wind development in New York.

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"With one shortsighted decision, the NYSPSC has thrown New York’s environmental and clean energy future into peril. Absent a robust offshore wind industry, it will not be possible for New York State to achieve its climate or environmental justice goals," American Clean Power Association CEO Jason Grumet said in a statement.

Meanwhile, following the decision from the NYSPSC, Democrat New York Gov. Kathy Hochul announced a 10-point plan to "expand and support" the large-scale renewable energy industry in the state. One of the plan's action points is to expand offshore wind development by increasing competition in the market and widening the pool of developers.

The Biden administration aims to approve 30 gigawatts of offshore wind energy by 2030. The decision in New York puts the goal in "serious jeopardy," according to the director of a green energy group. (Drew Angerer / Getty Images / File | John Moore / Getty Images / File)

And the decision comes amid the Biden administration's aggressive push to expand green energy development nationwide.

Days after taking office, President Biden issued an executive action that ordered his administration to increase opportunities for the offshore wind industry as part of his aggressive climate agenda to curb greenhouse gas emissions and stop global warming. Months later, he outlined goals to deploy 30 gigawatts of offshore wind energy by 2030, the most ambitious goal of its kind worldwide.

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As part of those plans, the administration has leased hundreds of thousands of acres to energy corporations and plans future lease sales in the Gulf of Mexico and off the coast of California.

Hochul's office didn't respond to a request for comment.