Distributed Energy Resources

N.Y. governor unveils master plan for 2,400 MW of offshore wind

New York Gov. Andrew Cuomo on Jan. 29 released a comprehensive New York State offshore wind master plan that sets forth the state’s strategy for meeting its goal of having 2,400 megawatts of offshore wind energy generation by 2030.

The master plan was prepared by the New York State Energy Research and Development Authority in coordination with several entities including two public power utilities -- the Long Island Power Authority and the New York Power Authority.

As part of his 2017 State of the State Address, Cuomo set an offshore wind energy development goal of 2,400 MW by 2030. Taking the first step to reach this goal, Cuomo, in his 2018 State of the State Address, called for the procurement of at least 800 MW of offshore wind power between two solicitations to be issued in 2018 and 2019.

Offshore wind is a key component of the governor's mandate to generate 50 percent of the state's electricity needs from renewable energy sources by 2030.

Since 2016, New York has been conducting research, analysis, and outreach in order to evaluate the potential for offshore wind development and to inform the state’s path for meeting its goal of 2,400 MW of offshore wind energy generation by 2030. The master plan sets forth the State’s comprehensive strategy to reach that goal.

National offshore wind picture

The master plan includes a section detailing where things stand nationally with offshore wind development.

“With more than 2,000 GW of potential wind energy capacity using existing technology, the U.S. has enormous potential for offshore wind energy development,” the plan said, noting that there is already a healthy pipeline of offshore wind projects under development.

The U.S. Bureau of Ocean Energy Management (BOEM) has leased nearly 1.4 million acres for wind energy development and nearly 2 million more acres are under consideration and scoping by BOEM. The first U.S. offshore wind farm, off the southern coast of Block Island, Rhode Island, began operating in December 2016 and has a capacity of 30 MW.

In April 2017, BOEM executed a lease with Statoil Wind US LLC for what could become the first large wind development project off of New York’s coast. BOEM also executed leases for wind energy areas off the coasts of Massachusetts, Rhode Island, New Jersey, Delaware, Maryland, Virginia, and North Carolina, some of which could eventually contain offshore wind energy projects that would provide energy to New Yorkers.

The plan notes that LIPA contracted for 90 MW of power from Deepwater Wind’s South Fork Wind Farm off the southern coast of Rhode Island and Massachusetts, east of Montauk.

The master plan details what it says will be the benefits of offshore wind energy development for New York state including the environment and economic benefits.

“It is not possible to precisely quantify all of the environmental benefits that may result from developing offshore wind energy,” the plan said. However, the magnitude of some benefits can be estimated and monetized, it said. “Even with this partial view, it is evident that the monetary values of the benefits of offshore wind energy would be significant, and justify the investment of public resources in policies to promote offshore wind energy development.”

The plan says that the development of 2,400 MW of offshore wind energy would annually reduce greenhouse gas emissions in New York State by more than five million short tons, which is the equivalent of removing nearly one million cars from the road by 2030. This accounts for approximately one-third of the expected greenhouse gas reductions from new renewable energy projects that will be constructed by 2030 to meet the Clean Energy Standard 50 percent renewable electricity target.

According to the plan, this emissions-reduction benefit would amount to approximately $1.9 billion (net present value) based on the “social cost of carbon” published by the U.S. Environmental Protection Agency.  An offshore wind policy options paper filed by NYSERDA with the New York State Public Service Commission estimates that this emissions-reduction benefit alone would approximately equal the program costs of procuring offshore wind energy, even before accounting for the wider economic development and health benefits.

Another environmental benefit listed in the plan is air quality improvement.  “The production of zero-emission energy close to the two largest load pockets in New York State — New York City and Long Island — could improve local air quality and public health in these locations and beyond by reducing the need for high-emission generation facilities,” the plan said.

Cuomo’s office noted in a news release that New York will form multiple Technical Working Groups consisting of experts and interested parties in different disciplines. The initial groups will focus on offshore wind jobs and supply chain, commercial and recreational fishing, maritime activities, and environmental issues.

NYSERDA paper includes several procurement options

The master plan said that long-term technology cost reductions and cost-effective procurement are essential parts of New York’s strategy to deliver its 2,400 MW goal.

In completing the offshore wind policy options paper, NYSERDA conducted an analytical assessment of different mechanisms that could be used to procure offshore wind energy and associated attributes and analyzed each mechanism’s potential to result in cost-efficient project development. The options paper also considers offshore wind’s role in achieving New York’s 50 percent renewables by 2030 goal and a transmission and interconnection strategy.

The master plan said that in Europe, offshore wind development costs have decreased dramatically in recent years. In many cases offshore wind is cost-competitive with land-based renewables. The cost reductions seen in Europe “depended to a material extent on local learning and local infrastructure development resulting from economies of scale,” the plan goes on to say.

“With achievement of the 2,400 MW goal contributing to similar scale economies in the U.S. Northeast, NYSERDA projects that by 2030 the cost to procure offshore wind will be lower than the cost of Tier 1 Renewable Energy Credits (RECs) associated with other large-scale renewable technologies. Offshore wind therefore has the potential to lower the cost of meeting the 50 by 30 target.”

In the options paper, NYSERDA proposes that initial policy decisions will be made for a “Phase I” of offshore wind procurement and deployment. In line with Cuomo’s announcement at his 2018 State of the State address, this would be comprised of two initial annual offshore wind procurement rounds of at least 400 MW each in 2018 and 2019. NYSERDA said in the paper that it expects that policy options for future procurements would be reviewed and adjusted as appropriate.

The paper lays out seven procurement options. “Key differentiating factors between procurement options are the extent to which hedging benefits are provided against risks of commodity revenue uncertainty, and the level of involvement of NYSERDA and other organizations, such as utilities,” NYSERDA said.

Of the seven options, NYSERDA said that two options for offshore wind procurement in New York during Phase I do not offer a similar level of benefits as the other five potential approaches: (1) fixed REC, due to the relatively high projected costs; and (2) Market Ocean Renewable Energy Credit (OREC), unless jurisdictional uncertainties can be addressed. 

Additional details related to the seven procurement options are included in the options paper.