THE TWO wind farms seeking to terminate their Massachusetts power purchase agreements may have to forfeit tens of millions of dollars, according to the House’s energy leader.

Rep. Jeffrey Roy of Franklin, the House chair of the Legislature’s Telecommunications, Utilities, and Energy Committee, said Commonwealth Wind would forfeit $48 million and SouthCoast Wind would lose $60 million. The money would go to the state’s three major utilities, and likely be rebated to customers.

The money was required under the terms of the power purchase agreements the wind farm developers signed last year with the state’s three utilities. The developers now say their projects can no longer be financed under the deals because of inflation, rising interest rates, supply chain disruptions, and the war in Ukraine. The companies are seeking to terminate their projects and rebid them in the state’s next offshore wind procurement in 2024. The Healey administration has said little, but seems supportive of that approach.

“I know [the developers] are negotiating that with the utilities currently and we’re hopeful that’s going to be resolved soon,” said Roy on The Codcast. “When the bids come in, I fully support the notion that we should not preclude them from bidding on the next round because there aren’t many players in this space.”

Joseph Curtatone, the president of the Northeast Clean Energy Council, sided with Roy that the companies should not be prevented from competing in the next procurement, as a prominent state senator had suggested. “We should not be punitive,” he said. “We need competition.”

New York state appears to be taking a different approach. Wind farm developers there are making the same argument – that their projects are no longer viable because of changing economic conditions — but they are asking that the existing contracts be amended to provide more funding. In other words, no penalties – just more money.

That was the solution originally pursued by the wind farm developers in Massachusetts, but the state’s utilities and the Department of Public Utilities refused to go along. One utility, Eversource, said there is no mechanism in Massachusetts to amend a contract once it has been approved by the DPU. Eversource also noted the last procurement operated under a price cap that limited how high the price could go. The price cap won’t be in play with the next procurement.

Roy said the upshot of all the maneuvering over power purchase agreements is likely to lead to more delays and much higher prices. He said the state must proceed, however.

“It’s still necessary for us,” he said. “When you look down the road, the cost of not achieving these goals and the cost of rising waters and more damage from climate change and global warming are very much higher than the cost of getting these turbines up and built.”

Curtatone said the contractual mess in offshore wind is only a temporary setback. “These are not failures,” he said. “These are headwinds.”  

Roy agreed. “The offshore wind industry is not in trouble by any means. We’re going to experience some delays,” he said. “Our hope to get a lot of offshore wind by 2030 is probably not going to happen. We’re looking closer to 2031, 2032, so that’s a roadblock but it’s not the end of the road for offshore wind.”