New York state ratepayers will pick up the tab for the Cuomo Administration’s multi-billion dollar plan to jump-start the offshore wind industry, but most won’t benefit from the energy produced.
Only consumers in Long Island and New York City will be able to access the wind-powered energy that’s going to be generated in the waters off the state’s Atlantic coast in the years to come.
As soon as 2020, typical residential ratepayers could see an increase of up to 76 cents a month in their electric bills as the state goes all-in on offshore wind as a critical piece of the state’s renewable energy future, The Journal News/lohud has learned.
That’s in addition to the average $2 per month charge state ratepayers are already paying for the bailout of three struggling upstate nuclear power plants for the next ten years.
The New York State Public Service Commission announced last week that it had agreed to procure some 800 megawatts of offshore wind energy over the next two years, the first phase in an effort to develop 2,400 megawatts of offshore wind energy by 2030, enough to power 1.2 million households in New York City and Long Island.
"Robust offshore wind development is not only critical to meeting our clean energy and carbon reduction goals, this investment has the potential to create thousands of jobs and fuel a $6 billion industry for New York as it combats climate change,” Cuomo said.
The energy will come from dozens of wind turbines located some 20 miles off the Atlantic coast, far enough off shore so they can’t be seen from Long Island beaches but close enough to robust scallop and squid habitats to prompt a legal challenge from the fishing industry.
Karl Rabago, the executive director of the Pace Energy Climate Center at the Pace Law School in White Plains, said the decision is an indication of Gov. Andrew Cuomo's firm commitment to renewables at a time when a number of natural gas producers are vying to fill the energy void left when the Indian Point nuclear power plant closes in 2021.
"When Cuomo announced that we were finally going to shut down Indian Point, part of the promise then was he said offshore wind was going to help," Rabago said.
“It should scare people who want to build natural gas plants based on imported natural gas,” he added. "Would you put half a billion dollars down to build a natural gas plant in Ulster County? I don’t think so.”
Groups like the New York Public Interest Research Group, which opposed the bailout of the upstate nuclear power plants, dubbing it “The Cuomo Tax,” have taken a different tack in the offshore wind debate.
They’ve argued that the bailout of two nuclear power plants in Oswego County and another near Rochester effectively propped up a nuclear power industry struggling to compete against the low price of natural gas. Estimates of the total cost for that bailout have ranged from $3 billion to $8 billion, depending on energy costs.
Money spent on offshore wind now will help the state reach its goal of relying on renewables for 50 percent of its energy needs by 2030, they say. New York currently gets just three percent of its electricity from wind.
“The failure to make a sufficient commitment to offshore wind threatens New York’s ability to meet the state’s greenhouse gas reduction and renewable energy goals, as well as achieving the potential for job creation and economic development,” NYPIRG said in April.
Jobs and fishing industry
NYPIRG cited statistics from a Stony Brook University study suggesting Long Island would get some 60,000 jobs during the construction and operations phase and nearly $13 billion in economic activity.
“Offshore wind will not only provide environmental benefits, but an economic opportunity that extends throughout New York State," said Doreen Harris, director of Large Scale Renewables at the New York State Energy Research and Development Authority (NYSERDA).
Not everyone is as optimistic.
Groups representing energy-intensive businesses across the state have lined up against the plan in comments submitted to the Public Service Commission this year.
“The Commission needs to take an affirmative step to protect New York’s businesses from the potentially cumulative costs of these programs, putting in jeopardy hundreds of thousands of jobs to develop a few thousand is a bad trade off,” the Business Council of New York State said.
The Long Island Commercial Fishing Association (LICFA), based in Montauk, have joined a lawsuit challenging the decision by the federal Bureau of Ocean Energy Management to allow thousands of acres off the Atlantic coast of Long Island to be leased to offshore wind companies.
The six areas available for lease could hold up to 200 wind turbines.
“The historical, traditional commercial fishing communities of Long Island, which include hundreds of small business owners, the very tax and rate-payers whose businesses help to support other small businesses throughout Long Island, are ground zero for having their very livelihoods and businesses destroyed,” Bonnie Brady, the executive director of LICFA wrote in April.
Cost of wind
State officials have been studying the environmental and economic impacts of the plan for the past two years. They looked at the impact the plan will have on birds and bats as well as the costs associated with building undersea cables to bring the wind energy to land.
They concluded the plan would add a new source of carbon-free energy in a densely populated of the state, where the energy grid is strained.
NYSERDA estimates the first procurement of 800 megawatts would cost $300 million and pegged the long-term cost of securing 2.4 megawatts at $2.1 billion. When the benefits of producing carbon-free energy are factored in, the long-term costs drop to $200 million, officials say.
"The cost of developing offshore wind continues to rapidly decline, even before taking into account statewide economic development opportunities and other benefits from statewide investments that will bring up to 5,000 new jobs in construction, manufacturing and operations from regional offshore wind demand," NYSERDA said in a statement.
How the deal works
The procurements will begin later this year through the purchase of Offshore Wind Renewable Credits over a two-year period with the rest coming in later years as the offshore wind industry matures and prices decline, state officials say.
NYSERDA would purchase the credits from wind developers and then resell them to utilities for retail use. The cost would be passed along to ratepayers.
State officials calculate that during the first phase ratepayers will see an increase of between .18 and .76 percent on their electrical bills or less than 76 cents per month for the typical residential customer. The .76 percent increase is considered the maximum increase ratepayers could see. Energy intensive businesses would pay more. And the increases would not kick in until the projects are being developed, beginning in the year 2020.
With offshore wind costs coming down in Europe and elsewhere, NYSERDA viewed the moved as an economic opportunity that dovetailed with the state's renewable energy goals.
“New York has all of the assets – labor, ports and policies – required to become a global hub for this emerging industry and we fully plan to capitalize on these strengths so that New Yorkers will reap the substantial environmental and economic benefits that offshore wind will bring,” said Alicia Barton, the president and CEO of NYSERDA.
Deepwater Wind expanding
Providence-based Deepwater Wind, which developed the nation’s first offshore wind farm off the coast of Rhode Island, has plans to develop a site off the Long Island coast.
Deepwater CEO Jeffrey Grybowski told the Associated Press on Wednesday that the company will be pushing ahead with projects in a number of states in the northeast in the coming years.
"We're going into a very intensive phase now, where in order to submit permit applications and begin to do the engineering and design, we will be spending tens of millions of dollars over the coming year to collect data from the wind farm locations," Grybowski told the Associated Press.
Rabago credits Cuomo for sticking to a plan outlined several years ago that he didn't back away from during an election year.
“This is a politician keeping a promise, right?,” Rabago said. “He said we we’re going to do this and he followed through. In this day and age that’s a good thing.”