THE STATE’S TWO leading offshore wind developers appear to be stalling for time as they explore whether the cast of new players on Beacon Hill may be more receptive to letting them back out of or tweak their existing power purchase agreements.
Avangrid, the company behind Commonwealth Wind, filed a lawsuit on Thursday challenging a December 30 decision of the Department of Public Utilities approving the wind farm developer’s power purchase agreements with three Massachusetts utilities even though Avangrid said the pricing is no longer sufficient to obtain financing for the project.
Mayflower Wind, being developed by Shell New Energies and Ocean Winds, filed a request with the DPU seeking a greater say in deliberations over the power contracts and more time to respond.
Both wind developers say power contracts they agreed to in May no longer pencil out because of inflation, interest rate hikes, supply chain difficulties, and the war in Ukraine. Commonwealth Wind has asked for a modest price increase or, barring that, the ability to withdraw its contract and bid in to the state’s next offshore wind procurement. Mayflower has been less forthcoming about what it wants, but says it agrees with Avangrid’s assessment of the situation.
Putting the legal maneuvering aside, both of the wind developers are playing for time. A statement issued by Avangrid spokesman Craig Gilvarg suggests the company needs more time to make its case to the new players on Beacon Hill.
“Avangrid is committed to working in partnership with the Healey-Driscoll administration, Attorney General [Andrea] Campbell, and the Massachusetts utilities to secure a speedy resolution to ensure Commonwealth Wind continues to move forward to deliver transformational economic investments in Salem and Somerset, create thousands of jobs, and achieve commercial operations before 2030 to help Massachusetts meet its nation-leading climate target,” said the statement.
The maneuvering over offshore wind pricing in Massachusetts is public, playing out in court and regulatory proceedings, but it’s also starting to bubble up elsewhere along the Atlantic coast.
New York and New Jersey are considering including inflation adjustments in future offshore wind contracts, but a group representing many renewable energy developers in New York says “an inflation adjustment” is needed now on awarded and contracted projects that have not yet begun operation.
In a letter to the head of the New York Energy Research and Development Authority, a group called the Alliance for Clean Energy said inflation “has translated into significantly higher construction costs for wind and solar projects, rendering a significant portion of the contracted projects uneconomic to build in the current environment and foreseeable future.”
Orsted, the Danish wind farm developer that is preparing to build Sunrise Wind off the coast of New York, saw its stock price tumble 7 percent after the company reduced the estimated value of the project by $366 million. The company blamed “project-specific [capital expenditure] increases, an unprecedented cost inflation, and rapidly rising interest rates in 2022.”
Sunrise Wind is a joint venture of Orsted and Eversource Energy, an arm of the dominant utility in Massachusetts. Interestingly, Eversource in Massachusetts is one of the utilities that has balked at changing the terms of its contract with Commonwealth Wind.