The closely watched New York solicitation, which allows companies to exit old contracts and re-offer projects at higher prices, comes as the nascent U.S. offshore wind industry warns it cannot complete projects profitably because of rocketing construction costs, high interest rates and supply chain snags.
The turmoil hit another planned project on Thursday when Denmark's Orsted (ORSTED.CO), opens new tab said it was exiting a deal for its Skipjack Wind to supply power to the state of Maryland because the terms were no longer commercially viable.
BP, Equinor and Orsted combined took roughly $5 billion in writedowns on U.S. offshore wind projects because their contracts would not cover their costs.
The development of offshore wind is key to meeting both national and state clean energy targets. To prevent the projects from falling through, states including New York are allowing developers to rebid projects at higher levels.
Norway's Equinor said it had submitted a bid in the solicitation shortly after agreeing to take full ownership of the Empire Wind project from BP, its joint venture partner.
As part of the swap deal, BP took full ownership of another previously joint project, the Beacon Wind development.
Both projects already had contracts to sell power in New York, but they were expected to seek new deals at higher power prices.
"The agreement provides Equinor and BP with the flexibility to pursue their respective priorities under their corporate strategies," Equinor said in a statement.
Equinor submitted a bid for the 810 megawatt (MW) Empire Wind 1, and said it would bid the related 1,200 MW Empire Wind 2 into a future solicitation.
One megawatt of offshore wind can power roughly 500 U.S. homes.
New York agreed to cancel the existing contract agreement with Beacon Wind 1. BP did not specify what its plans were for the project. The British oil major had been pursuing changes to the structure of its deal with Equinor.
"When joint ventures do not go as planned, rather than scrapping the investment that has been made to date, it's like a relationship - the parties divorce," said Brandon Dalling, a partner in King & Spalding's project finance group.
"One party keeps the investment opportunity, re-calibrates and continues on its own or with new interested partners."
Separately, Orsted said it had submitted a bid with its partner, Eversource, for the Sunrise Wind project. If the bid is successful, Orsted plans to acquire Eversource's 50% stake in the project.
New York could name all the bidders on Friday and is expected to announce winners of the solicitation in February.
