In response to threats from renewable energy developers to halt offshore wind energy projects due to high construction costs, New York Governor and the New York State Energy Research and Development Authority (NYSERDA) have initiated a new Request for Proposals (RFP).
This move, starting Thursday, November 30th, allows developers to rebid on these significant projects. The offshore wind projects in question are crucial for New York’s renewable energy goals, with the potential to supply power to approximately 2.5 million homes, significantly impacting the state’s emission rates. Brian Sampson, President of the Associated Builders & Contractors Empire State Chapter, emphasizes the importance of these projects but also points out the need to address the underlying issue of high construction costs.
The crux of the cost problem, according to industry experts, lies in the prevailing wage mandates. These mandates are reported to add between 15-25% to construction costs, varying by trade and region. Two significant studies highlight the impact of these prevailing wage laws on project costs. The Columbia University’s Center for Urban Real Estate published a white paper titled “The Complex Worlds of New York Prevailing Wage,” outlining how these mandates can increase construction costs by up to 30%. Similarly, the Empire Center for Public Policy’s study, “Prevailing Waste,” concluded that such mandates could raise overall construction costs by 13% to 20%, depending on the region.
Given these financial challenges, there is a growing call for the state to address the construction industry’s affordability crisis to meet its renewable energy goals. One proposed solution is to repeal the prevailing wage mandate on renewable energy projects, potentially reducing the cost of taxpayer-funded renewable projects by 10-30%. This approach would allow New York State to advance toward its renewable energy targets without excessively burdening taxpayers and ensure the continuation of these vital offshore wind projects.
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