New York & New Jersey offshore wind solicitations – update
New York releases Draft Offshore Wind RFP
New York has issued a draft RFP that is available for comment from offshore wind developers and other stakeholders interested in the upcoming solicitation.
Comments will help to inform and refine the final RFP to be issued in the fourth quarter of 2018. They are due by Friday, October 5, 2018 at 5:00 p.m. ET. We note that NYSERDA does not intend to make comments public.
The final RFP is expected to be released in the fourth quarter of 2018 and NYSERDA plans host a proposers conference and supply chain forum prior to the deadline for submitting. The notification of the award will be April 2019 and the contracts are expected to be signed in June 2019. The application fee to submit an proposal to NYSERDA is $300,000.
The proposers are expected to submit at least a base case proposal, but are also allowed to submit another alternative proposal. There is also an opportunity to submit a transmission proposal.
- Base Case Proposal: ORECs delivered from an approximately 400 MW Offshore Wind Generation Facility, for a 25-year Contract Tenor. Must include both Fixed OREC and Index OREC pricing.
- Transmission Proposal: ORECs delivered through a direct marine cable interconnection from the Offshore Wind Generation Facility to a point in NYISO Zone J or Zone K. The Transmission Proposal may be included as part of a Base Proposal but is not a mandatory component. Must include both Fixed OREC and Index OREC pricing over the Contract Tenor. The Transmission Proposal may be for either a 20-year or 25-year Contract Tenor and may offer constant nominal or non-decreasing nominal Fixed OREC and Index OREC Strike Prices.
- Alternative Proposal: ORECs delivered from Offshore Wind Generation Facilities of other technical configurations or interconnection points, other installed capacity, or other expected Commercial Operation Dates. Alternate Proposals may be for Contract Tenors of 20 or 25 years. Proposals must be for over 200MW. Fixed OREC and Index OREC pricing for Alternative Proposals may be submitted in the form of either constant nominal strike prices or as a non-decreasing schedule of nominal strike prices by Contract Year.
The RFP includes contract commitments that the winning bidder will be required to abide by. They include:
- Proposers must agree that all laborers performing construction activities relating to the project must be paid wages and benefits in an amount not less then the Prevailing Rates in New York.
- Proposers must agree to a Project Labor Agreement.
- Proposers agree that if their project is selected they will submit their SAP (Site Assessment Plan) and COP (Construction and Operations Plan) to NY State Agencies for consultation before submitting them to BOEM.
- Proposers will understand that winning bidders are required to participate in technical working groups.
- Proposers must agree to make publicly available any information or data that is developed in the furtherance of the project and relates to environmental characteristics.
- Proposers must agree to install lighting controls to minimize nighttime visibility.
- Proposers must submit a fisheries mitigation plan and environmental mitigation plan.
- Proposers must agree to provide NY companies with the opportunity to provide goods and services to developers of the project for which there is capacity in New York State.
Evaluation Criteria: The scoring committee will evaluate projects on a scale from 1-100. Project viability will account for 10 points, NY economic benefits will account for 20 points and offer strike price will account for 70 points.
Click here to read the NYSERDA draft RFP
New Jersey BPU Opens Offshore Wind Solicitation
On Monday Sept 17th, the New Jersey BPU approved the rules for an application process and framework under which the Board will consider qualified offshore renewable projects and ORECs.
The first solicitation period will look to secure offshore wind renewable energy certificates (ORECs) for up to 1,100 MW. The application window will open on Thursday, September 20, 2018 and end of Friday, December 28, 2018. All offshore wind projects that are able to interconnect to the transmission system in New Jersey are welcome to apply. The state is moving forward quickly with the solicitation process in order for developers to have sufficient time to acquire the ITC by December 31st, 2019.
Applications are due on December 28, 2018 and will be reviewed for a determination of completeness by January 28, 2018. The Board then has 180 days or until June 28, 2019 to evaluate, deliberate and make a determination on the application. The procurement website http://NJOffshoreWind.com went live on October 5th, 2018.
- An initial deposit of $150,000 is required.
- Bidders may offer projects up to 1,100 MW in with a minimum offer size of 300MW. However, all bidders must offer at least one bid alternative sized at 400 MW. (the purpose of this is to inform the BPU about the cost of diversity and allow them flexibility in their procurement of 1,100 MW).
- An estimate of direct transmission interconnection.
- An estimate of Transmission System Upgrade costs.
A list of nineteen required materials and descriptions can be found on page 7 of the New Jersey Offshore Wind Solicitation Guidance Document.
Once the Board has approved an offshore wind project, the qualified project will be funded through Offshore Wind Renewable Energy Certificates (ORECs). Developers of a qualified offshore wind project will be eligible to receive the full amount of the cost to build and operate an offshore wind project for 20 years.
Utilities will implement the Board-approved total annual OREC allowance multiplied by the OREC price to be collected from all rate-payers on behalf of the suppliers. The utilities will then make monthly OREC payments to offshore wind developers based on the actual number of MWhs produced by the offshore wind project, until reaching the total annual OREC allowance. The Board will direct the utilities in New Jersey to enter into a joint contract with an OREC administrator who will serve as the sole administrator for accounting, compliance and invoicing related to the OREC obligations.
At the end of each month, developers will submit invoices to each utility detailing the number of MWhs generated by the project and the number of ORECs available for sale and the price. The project revenues listed on this invoice will be due to be refunded to the ratepayers.
Note: that the OREC Funding Mechanism is currently under consideration by the BPU. The BPU is accepting comments regarding the Funding Mechanism through October 20,2018.The BPU plans to set a date for consideration of the adoption of the OREC Funding Mechanism Rules before the close of the application window.
The applications will be evaluated based on the six criteria listed below. The guidance notes that while OREC Prices may be increased at a fixed pace year by year, projects will be evaluated on their levelized price per MWh. The BPU also may reflect in its evaluation the possible benefit of having a diversity of Project sponsors, technology types, and wind resource locations. The BPU will also consider in its evaluation the Applicant’s commitment to storage capability for its Project.
- OREC Purchase Price – This includes meeting the requirement for a fixed, pay-for-performance price as well as the implied subsidy above market prices.
- Economic impacts – This includes, among other metrics, the number of jobs created by the project, increase in wages, taxes receipts and state gross product for each MW of capacity constructed.
- Ratepayer impacts – This includes the average increase in residential and commercial customer bills. The Board will also consider the timing of any rate impacts.
- Environmental impacts – This includes the net reductions of pollutants for each MWh generated and the feasibility and strength of the applicant’s plan to minimize environmental impacts created by project construction and operation.
- The strength of guarantees for economic impacts – This includes all measures proposed to assure that claimed benefits will materialize as well as plans for maximizing revenue from the sales of energy, capacity and ancillary services.
- Likelihood of successful commercial operation – This includes feasibility of project timelines, permitting plans, equipment and labor supply plans and the current progress displayed in achieving these plans.
RCG has been following the proceedings leading up to both of these open solicitations closely and is also planning to attend New Jersey’s technical conference where the BPU will review key details of the solicitation, including application requirements and evaluation standards and answer bidder questions on Oct 10th as well as attend stakeholder meetings in New York . We would be happy to answer any questions you may have about the application process or funding mechanisms and assist in drafting any materials or comments for the solicitations.