New York has ambitious goals for clean energy projects. To achieve those objectives, it needs to award contracts to companies from around the world. Since this type of business invites regulatory scrutiny, has financial parameters and must adhere to specific rules in how it is structured, it can be complicated from all perspectives.
Companies receive contracts for offshore wind projects
Two companies – one based in Denmark and the other in Norway – received conditional contracts to provide energy to New York through offshore wind projects. As the state is trying to expand its clean energy base, it has encountered rough terrain including ballooning costs. This project, when it is completed, will provide electricity for as many as a million homes. It will be the biggest project in the energy generation sector in almost 40 years.
There were concerns about the bidding for the project as companies were granted the right to leave previous agreements and charge more for new projects. Various issues have slowed offshore clean energy because of economic factors like rising construction costs, problems with supply chains and interest rate increases.
The two companies saw financial losses in previous offshore wind projects and wanted to raise costs to customers. New York officials said no, but did let the companies give new bids. The state wants to encourage companies providing renewable energy to invest in the state and to try and fight back against climate change with these projects. The terms are still under negotiation, but are expected to be completed later this year. When it is finished, the project is expected to be the largest in the nation.
Addressing the complexities of energy law requires guidance
There are multiple angles with these types of energy projects and all require a firm understanding of energy law. The companies had contracts that they extricated themselves from to make new bids. The state resisted attempts to charge more for energy.
Given the litany of legal issues that need to be navigated with these ambitious projects and the number of challenges that inevitably arise, it is important for companies to understand the intricacies of energy law. This can be critical to achieving their goals efficiently.