Equinor Emphasizes "Perseverance" on West Coast Offshore Wind
Despite the serious financial headwinds facing the U.S. offshore wind industry, oil major Equinor has reiterated its commitment to a future two-gigawatt megaproject off the coast of California, which will use a floating platform technology that is more expensive than the bottom-fixed foundations found on the U.S. East Coast.
Equinor holds a prime lease area about 50 nautical miles off Morro Bay, California, one of the premier areas for wind development in the state. There are several recent developments in its favor: California's government has approved a central buyer agency for wind power, and it has smoothed the path for local permitting and power transmission, improving the odds of commercial viability. Still, given elevated local construction costs, California's transmission grid limits, and the economic difficulties facing even less-costly developments on the other side of the nation, clean power advocates acknowledge that West Coast offshore wind faces a challenging path and a longer timeline to market.
Equinor announced Wednesday that it has named its future Morro Bay wind project Atlas, in hopes of projecting an image of resilience.
"Atlas is a symbol of strength and fortitude, and most importantly perseverance, as we bring tested, world-class technology to California’s Central Coast,” says Molly Morris, President Equinor Renewables Americas. “Courageousness is one of our company’s core values and Atlas is a perfect representation of forward momentum."
Equinor's existing Empire and Beacon Wind projects on the U.S. East Coast face substantial headwinds due to inflation and interest rate hikes, and they are believed to be under review for commercial viability. Project partner BP - which paid Equinor $1.1 billion in 2020 to take a 50 percent stake in these projects - recently declared that the U.S. offshore wind business model is "fundamentally broken" after recording a $540 million impairment on the two developments. Equinor booked a smaller writedown of $300 million on Empire and Beacon early this month.
Empire Wind 1 originally bid for a New York State power purchase auction at a strike price of $118 per MWh, and BP/Equinor unsuccessfully sought permission to raise that rate to $160. For Beacon Wind, they sought to increase the price from $118 per MWh to more than $190, a jump of more than 60 percent. Since the state has denied permission to raise prices for either one, analysts see a possibility that the projects may be canceled and rebid. In anticipation of this scenario, New York's governor has announced a future auction round early next year to replace projects that withdraw from their contracts.