With the termination of the Offshore Wind Renewable Energy Certificate (OREC) agreement for the Empire Wind 2 offshore wind project, BP and Equinor have cancelled the contract for the project’s offshore substation (OSS) with the Singapore-based company Seatrium.
As reported earlier today, 4 January, the Empire Wind joint venture has signed an agreement with the New York State Energy Research and Development Authority (NYSERDA) to terminate the Offshore Wind Renewable Energy Certificate (OREC) contract for the 1,260 MW Empire Wind 2 amid difficult economic conditions that are affecting the project’s viability.
Seatrium, a wholly-owned subsidiary of Sembcorp Marine Offshore Platforms (SMOP), secured contracts for the delivery of two offshore substations for Empire Wind, one for the 816 MW Empire Wind 1 and one for the 1,260 MW Empire Wind 2, in May 2023.
The contract for the Empire Wind 2 offshore substation, worth USD 250 million (around EUR 228 million), has now been cancelled, Seatrium said on 4 January.
Construction work on the Empire Wind 2 OSS was expected to commence in June 2024, with minimal engineering work performed, Seatrium said and added that the company will make the construction capacity set aside for this project available for other projects in its pipeline.
The cancellation of the Empire Wind 2 OSS contract is not expected to have a material financial impact on Seatrium’s earnings per share and net tangible asset per share for the current financial year, the company informed.
“The contract is structured on progressive payment milestones, and payment for the work performed to date has been received, resulting in neutral project cashflow,” Seatrium stated in its press release.
For the first substation, the Empire Wind 1 OSS, Seatrium started construction work in the fourth quarter of 2023. The Empire Wind joint venture confirmed the Empire Wind 1 project contract for Seatrium remains unaffected and continues as planned, according to the company.