An independent financial analysis revealed that New Yorkers could end up paying 2.5 times the market rate for electricity generated by the Empire Wind One offshore wind farm, which is located 14 miles south of Long Island in the Atlantic Ocean. The Trump Administration recently halted construction of the project for further review, a move that was welcomed by critics who believe the project is overcharging taxpayers. The project has received support from New York Governor Kathy Hochul and New York City Mayor Eric Adams, but critics argue that the energy produced by the wind farm is not clean, affordable, or reliable.
According to Edward P. O’Donnell, a New Jersey nuclear engineer and consultant, Empire Wind One was awarded a contract to charge $155 per megawatt-hour (MWH) for their power, which is a subsidy compared to the market rate of about $50 per MWH. The total amount of the subsidy is estimated to be $9 billion, and the New York Independent System Operator is mandated to purchase power generated by offshore wind at higher rates than power from gas-fired or nuclear plants. Additionally, the federal Inflation Reduction Act provides a 30% tax credit for offshore wind projects in the US, further increasing the cost burden on taxpayers.
O’Donnell predicts that if Congress repeals the federal tax credit for offshore wind projects, the cost burden will likely shift to consumers. Previous examples involving Empire Wind One and another contractor, Sunrise Wind, have shown that when faced with high costs and supply chain disruptions, the companies have requested rate hikes. Despite the New York State Public Service Commission rejecting these requests, the developers have been able to renegotiate their contracts for significantly higher prices, resulting in billions of dollars in subsidies from New York ratepayers.
The director of Protect Our Coast Long Island criticized the subsidies provided to offshore wind companies, arguing that public utilities should not profit off taxpayers. Despite the project being put on hold by the Trump Administration, there are concerns raised by the Department of the Interior regarding the approval process for the Empire Wind Project. While some are pleased with the pause in construction, there are calls for a full stop to the project in order to prevent further financial burden on New York ratepayers and taxpayers across the country. Empire Wind declined to comment on the subsidies, and NYSERDA, the New York State Energy Research and Development Authority, did not address the economic analysis but criticized the organization sponsoring it.
Overall, the financial analysis conducted by O’Donnell highlights the potential for New York ratepayers to bear a significant financial burden due to the subsidies provided to offshore wind companies. The situation raises concerns about the affordability and reliability of energy generated by offshore wind projects, as well as the potential for private equity companies to profit off taxpayer subsidies. Despite the support from government officials for the Empire Wind One project, critics remain concerned about the increasing costs and lack of transparency in the approval process. The call for a halt to the project reflects the growing opposition to offshore wind projects that place a heavy financial burden on taxpayers.
