Rocketing Costs Could Halt 144-Megawatt New York Offshore Windfarm

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Researched by Industrial Info Resources (Sugar Land, Texas). At the turn of the century when New York State owned Long Island Power Authority (LIPA) (Uniondale, New York), the authority first looked at the possibility of constructing an offshore windfarm with estimated costs between $150 million and $200 million. LIPA selected FPL Energy, a subsidiary of FPL Group (NYSE:FPL) (North Palm Beach, Florida), in 2003 to be the build, own and operate (BOO) the windfarm, which would be located a little over 3.5 miles off the south shores of Long Island. The estimated cost of the 144-megawatt (MW) windfarm at that point had doubled and was estimated to be approximately $356 million.

During the permitting process the federal government changed the permitting responsibility from the United States Army Corps of Engineers to the United States Minerals Management Services. The cost of changing of permitting agencies cost the project not only time but additional preparation fees. As a result of the additional time spent FPL was caught by an increase in the cost for materials.

The planned offshore windfarm was to utilize forty 3.6 MW GE wind turbine/generator sets to produce the 144 MW of renewable energy. FPL now estimates that the cost for the units with installation stands at an estimated $697 million. LIPA estimates an expenditure of $100 million to install the cables and other transmission tie-in requirements. The new projected cost for the 144MW windfarm is estimated to be about $797 million for a 531% increase over original projections. FPL still doesn’t have a final power purchase agreement. Decisions as to whether to proceed with the project are expected by the end of the year.

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