Shares of offshore wind farm developer Orsted A/S fell more than 8% early Friday on reports that the New York Public Service Commission has denied requests by energy firms that also include Equinor and BP to charge customers billions of dollars more under future power sale contracts.
Reuters reported that this could force some developers to scrap plans to sell power to customers in New York if the contracts don’t cover project costs.
Developers were looking to renegotiate contracts on four offshore wind and 86 land-based renewable projects, the Commission said in a statement posted on its website.
“The requested amendments to the contracts would have provided adjustments outside of the competitive procurement process; such relief is fundamentally inconsistent with long-standing Commission policy,” said Commission chair Rory Christian.
"The Commission has repeatedly stated that competition in the procurement process is necessary to protect ratepayers and provides the soundest approach to mobilize the industry to achieve our critical State goals dependably and cost-effectively, and we do so again through today's action.”
In Orsted’s case, it has raised concerns that it may be forced to write down its US projects. The Danish energy company’s shares tumbled close to 25% on August 30 after it warned of significantly higher costs on the projects.
It has contracts to sell power in New York from two offshore wind farms off Rhode Island and Massachusetts, the 132-megawatt (MW) South Fork, which is under construction, and the 924-MW Sunrise, which is under development.
"Sunrise Wind's viability and therefore ability to be constructed are extremely challenged without this adjustment," Orsted CEO Americas David Hardy told Reuters in an email.
Its shares traded 8.3% down at 329.40 Danish krone on the Copenhagen market by midday on Friday.
Contact the author at stephen.gunnion@proactiveinvestors.com