BP and Equinor End NY Offshore Wind JV Splitting Empire and Beacon Wind

 

Two of the large offshore wind developers, BP and Equinor, announced an agreement to end their joint venture projects in New York and independently pursue future offshore wind opportunities as they positioned for today’s close of New York State’s fourth offshore wind solicitation. The companies will swap interests in both Beacon Wind and Empire Wind and associated shore facilities in Brooklyn and Queens, New York.

The two companies had a 50-50 joint venture to develop Empire Wind which would be located south of Long Island and Beacon Wind which would be located between Cape Code, Massachusetts and Long Island, New York. Equinor won the lease for Empire Wind in 2017 and Beacon Wind in 2019. The following year, BP joined the projects with an investment of $1.1 billion.

Both projects are advanced in their permitting process with the two phases of Empire Wind having already received federal Record of Decision from the Bureau of Ocean Energy Management. The federal environmental review for Beacon Wind commenced in June 2023. Offtake contracts were also set for Empire Wind 1 in 2019 and 2021 and contracts for Empire Wind 2 and Beacon Wind 1 were included in New York’s second solicitation. New York regulators in October 2023 however rejected a proposal for the wind farms to revise their power agreements to reflect increased costs.

Under the agreement announced today between the two companies, BP will take full ownership of Beacon Wind and Equinor will take full ownership of Empire Wind. BP will also take ownership of the Astoria Gateway onshore to support the project while Equinor will take ownership of the facility at the South Brooklyn Marine Terminal.

The companies also said that they agreed with the New York State Energy Research and Development Authority (NYSERDA) to terminate the power agreement for Beacon Wind. Canceling the prior contracts was a condition for the developers to resubmit in the new solicitation which closes today. BP did not indicate if it would be submitting a proposal but did report it will be taking a pre-tax impairment charge of around $0.6 billion related to its U.S. offshore wind assets.

The Beacon Wind lease was originally awarded in 2019. The plan calls for two phases with Beacon Wind 1 having a potential capacity of 1,230 MW and the second phase 1,360 MW. The lease comprises a combined area of 128,000 acres located between approximately 15 and 30 miles southeast of Long Island.

Equinor, however, confirmed it was submitting a revised bid today for Empire Wind 1 in the solicitation, but that Empire Wind 2 will be matured for a future solicitation round. Empire Wind 1 has the potential for 810 MW while phase 2 would have a potential capacity of 1,200 MW.

This swap deal follows a similar announcement by Ørsted yesterday that it would acquire Eversource’s stake in the Sunrise Wind project also located in New York State. The project is also seeking to rebid its power agreement and while saying it believes the potential for the project, Ørsted made the deal contingent on winning a position in the current New York State round.

Experts were predicting that New York would receive strong interest and a broad range of proposals in the new round. In addition to Ørsted, Equinor, and BP, several earlier-stage projects that do not have prior power agreements are expected to submit proposals. New York said it would make a fast decision anticipating selecting the projects by the end of February and targeting June to complete contracts.