Equinor (OSE:EQNR) and BP (LON:BP) have announced they are terminating an agreement with the US state of New York for a 1.26MW offshore wind farm.
Equinor and BP said the firms had reached a deal with the New York State Energy Research and Development Authority (NYSERDA) to terminate the Offshore Wind Renewable Energy Certificate (OREC) Agreement for the project.
Announcing the “reset” decision, the two companies said they will seek “new offtake opportunities” for the Empire Wind 2 project located south of Long Island.
Equinor and BP each hold a 50% stake in the Empire Wind joint venture.
The US Bureau of Ocean Energy Management (BOEM) approved the Empire Wind 1 and Empire Wind 2 projects in November last year.
When the contract for Empire Wind 2 was awarded in 2021, bosses at Equinor heralded it as a “game changer” for its North American operations.
© Supplied by EquinorBut as recently as September last year, Equinor and BP sought to boost prices by up to 54% for power from a trio of wind projects in New York, including Empire Wind 2, in an effort to counteract the impact of supply chain pressures and inflation within the sector.
Then in October, Equinor booked a $300m impairment across its US offshore wind developments.
‘Changed economic circumstances’
In a statement announcing the move, Equinor said the termination decision “reflects changed economic circumstances on an industry-wide scale”.
The Norwegian state-owned firm listed inflation, interest rates and supply chain disruption as key factors which prevented the existing OREC from “being viable”.
Equinor said the decision will reposition the “already mature project” to continue development “in anticipation of new offtake opportunities
Equinor and BP said the two firms “believe offshore wind can be an important part of the energy mix” and are “committed to maintaining substantial contributions” to the New York economy.
Equinor Renewables Americas president Molly Morris said the decision “provides the opportunity to reset and develop a stronger and more robust project going forward”.
“Commercial viability is fundamental for ambitious projects of this size and scale,” Ms Morris said.
© Supplied by Equinor“We will continue to closely engage our many community partners across the state.
“As evidenced by the progress at the South Brooklyn Marine Terminal, our offshore wind activity is ready to generate union jobs and significant economic activity in New York.”
Meanwhile, BP president of offshore wind Americas Joshua Weinstein said: “BP is supportive of NYSERDA’s leadership and commitment to offshore wind, which we believe is a critical part of New York State’s and America’s clean energy future.”
“Offshore wind can deliver reliable renewable power as well as economic benefits to the state and its communities.”
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