The Long Island Power Authority has approved a power-purchase agreement with Deepwater Wind for its 90MW South Fork project, moving the US substantially closer to getting its second offshore wind farm.
The PPA will allow Deepwater, which is primarily owned by hedge fund D.E. Shaw, to begin serious discussions about financing the $740m project.
The South Fork offshore wind farm is due online in 2022, and a spokeswoman for Rhode Island-based Deepwater tells Recharge construction could begin as soon as 2019. That means Deepwater is likely to build the second US offshore project as well as the first, following the recent completion of its 30MW Block Island.
The project will be built 30 miles (48km) off the eastern tip of New York’s Long Island, and deliver power to the grid-constrained South Fork peninsula, which contains most of the area known as the Hamptons, a wealthy seaside resort that includes some of the most expensive residential property in the US.
The PPA’s approval was expected after New York Governor Andrew Cuomo two weeks ago called on LIPA, a state-owned utility, to back Deepwater’s project.
LIPA evaluated a variety of proposed projects to help alleviate the grid constraints in the South Fork load pocket, which has a peak load of around 300MW and is seeing demand growth of around 2.5% a year.
It ultimately determined that a portfolio encompassing the South Fork wind farm and two 5MW battery-storage projects backed by NextEra Energy Resources and National Grid to be the lowest cost way of easing the region’s bottlenecks.
The 20-year “pay for performance” PPA will see LIPA paying Deepwater for whatever electricity it can deliver to Long Island, with the developer responsible for all development and construction risk as well as any transmission losses along the 50-mile subsea cable route.
If the wind farm delivers more power than expected, LIPA gets to buy it at a discount. The utility is also entitled to ask for a five-year extension of the PPA at a discounted price.
South Fork’s PPA adds to the recent momentum in the nascent US offshore sector. This year Massachusetts will begin a regular series of offshore wind tenders leading to 1.6GW of installed capacity by 2027, while Cuomo recently committed New York to building 2.4GW off its coastlines by 2030.
Earlier this month Norway’s Statoil won a highly competitive tender for an offshore zone off the southern coast of Long Island, which could see it building 800MW of capacity to feed New York City.
While GE Renewables would appear to have the inside track for the South Fork turbine deal, having supplied its 6MW Haliade machines at Block Island, the PPA leaves the door open to alternative suppliers. Deepwater chief executive Jeffrey Grybowski has said the developer will take a close look at larger machines in the 7MW/8MW range, leaving hope for MHI Vestas and Siemens.
The South Fork wind farm would be the first phase to be built within Deepwater’s 1GW “ONE” zone. Future projects in the zone will likely target power markets in New England, with Deepwater expected to participate in Massachusetts’ tenders.