EVERY COUPLE OF DAYS a picture surfaces out of New Bedford showing ships bringing in the giant parts needed to assemble Vineyard Wind, the nation’s first commercial-scale wind farm.

The eye-catching images are a reminder that offshore wind is coming, but of late the news about the fledgling industry suggests the rollout is going to be a lot slower than predicted. Four major offshore wind developers in Massachusetts and New York say their signed contracts to deliver electricity are no longer adequate to secure financing for the projects given the runup in interest rates, inflation, supply chain disruptions, and the war in Ukraine.

The shifting economic winds are having a cascading effect. The developers say they need more money to build their wind farms, which is putting regulators in a very awkward situation. States need the wind farms to have a chance of meeting their climate change goals, but giving in to the demands of the developers could set a dangerous precedent and translate into much higher prices for electricity ratepayers.

It’s a high-stakes, high-cost situation with no easy answers – and no obvious bad guy to take the fall for a major economic shift that has set the offshore wind industry on its heels. “The world really did change and now everything is different,” said Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University.

Vineyard Wind doesn’t appear to be affected that much because its power purchase agreement was approved in April 2019 and its contracts for wind turbines and other parts were signed before Russia began its invasion of Ukraine in February 2022.

SouthCoast Wind and Commonwealth Wind came along later, in two separate procurements that weren’t finalized until May 25, 2022. Four months later, Commonwealth Wind was raising alarms about deteriorating economic conditions and a month later in October told state regulators its project was no longer viable without pricing adjustments. The Department of Public Utilities brushed the concerns aside and approved the power purchase agreements on December 30, 2022.

Gov. Maura Healey and her administration have been very circumspect about what should be done. Healey as attorney general opposed a plea from the wind farm developers to reopen and tweak the contracts to make them viable. So did then-governor Charlie Baker, who said “there’s no such thing as a do-over and there shouldn’t be.”

Once she became governor, Healey opened the door to “contract modifications,” but by that time Avangrid, the company behind Commonwealth Wind, had decided it was going to seek to terminate its existing contract and rebid the project in a procurement scheduled for next year.

In a February 27 letter to Avangrid CEO Pedro Azagra, Rebecca Tepper, Healey’s secretary of energy and environmental affairs, seemed irked at the company’s stance.

“As you know, the procurement process entails risk that project costs will change between contract execution and commercial operations. Bidders assume these risks and cannot in good faith anticipate that ratepayers will absorb higher costs if macroeconomic conditions change. Offshore wind is a critical industry for the Commonwealth, and it is essential that the procurement process for offshore wind remain fair, open, and competitive. As we are still in the infancy of what will be a major industry in the Commonwealth, I am committed to establishing procurement processes that do not reward developers for backing out of their commitments. The impact that tactic could have on ratepayers is one of the many concerns that will drive our design of the procurement process as I seek to ensure robust competition and fairness,” she wrote.

In early May, Tepper released the Healey administration’s proposal for a 2024 offshore wind procurement that gave hope to the offshore wind developers. The draft request for proposals said the state would take into account a developer’s past performance on contracts, but would not prevent a company that failed to live up to the terms of a past contract from bidding in the 2024 procurement.

The review of past performance became an even smaller issue when two other developers with major wind lease holdings off of Martha’s Vineyard announced recently that their projects in New York are no longer viable without reopening the contracts and upping the pricing. So now four of the five wind farm developers that could compete for contracts with Massachusetts appear to be in the same boat.

Francis Slingsby, the CEO of SouthCoast Wind, said earlier this month that the Healey administration’s draft RFP was the green light his company needed to move forward with terminating his company’s existing contract and focus on bidding in the next procurement in 2024. He said the RFP allows the company to bid again with little risk, given that most other developers are facing the same problems. The RFP also included a mechanism for adjusting pricing upward or downward after the contract’s approval depending on shifting economic conditions.

Asked his level of confidence in winning a contract in the next round, Slingsby put it at 6 or 7, with 1 being no confidence at all and 10 being absolute confidence.

On Beacon Hill, most lawmakers and climate change activists are in favor of allowing the developers to terminate their existing contracts and rebid them at higher prices in 2024. Rep. Jeffrey Roy of Franklin, the House chair of the Telecommunications, Utilities, and Energy Committee, said that despite the fact that the rebids will drive up electricity prices and cause delays in building the wind farms, the state needs to keep moving forward with as many competitors as possible.

“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.”

Sen. Michael Rodrigues of Westport, the chair of the Senate Ways and Means Committee, is one of the few lawmakers on Beacon Hill who doesn’t see it that way.

“In my mind, in my world, a contract is a contract and you either perform or you don’t perform,” Rodrigues said. “They have the ability to pull out, but I don’t think that they should be rewarded for that by having a contract to provide what they were originally supposed to provide with a much greater windfall. My question is who’s looking out for the ratepayers. Everybody’s worried and concerned and wanting to protect and bend over backward for the developers. What about the people who are going to pay the electric bills?”

Ron Gerwatowski, the chair of the Rhode Island Public Utilities Commission and the Energy Facilities Siting Board, is reviewing SouthCoast’s plan to build a transmission line to Massachusetts by going part of the way through Rhode Island. At a recent hearing, he said he felt compelled to go off-topic and raise concerns about the dilemma his fellow regulators face in dealing with offshore wind developers who are threatening to walk away from their projects unless their contracts are modified.

“That creates a huge problem from a ratepayer’s perspective,” he said. “It has the potential to create a dynamic where developers can simply refuse to go forward if economic conditions change where it’s cheaper for them to pay a financial penalty than to honor the deal. This can leave state regulatory commissions in a place where we must blindly approve contracts with less than competitive prices or risk falling short of policy goals – a veritable Hobson’s choice.”

Horowitz, of the Center for State Policy Analysis, acknowledges the bad precedent that would be set by letting wind farm developers escape their contracts. But he worries that pressuring them to proceed with inadequate profit levels would lead to a situation like the one the MBTA is facing with the Chinese manufacturer of new Red and Orange Line vehicles – a company that low-balled its MBTA bid to gain a foothold in the US market only to be cut off from expanding in that market by an act of Congress.

“You don’t always get the best work out of a company if it doesn’t have an incentive to perform well,” Horowitz said.

The big hope is that the wind farm developers can pay a financial penalty running into the tens of millions of dollars, put their troubled contracts behind them, and move on with building their wind farms – all with electric ratepayers not taking too big of a hit.

It’s a tall order. Healey has proposed procuring as much as 3,600 megawatts next year, but 2,400 megawatts would be needed just to restore the projects likely to be terminated. That leaves 1,200 megawatts of new growth.

There are five potential competitors, but none of the previous Massachusetts procurements has attracted interest from all of them. A big difference with next year’s procurement is the absence of a price cap, which required each successive project to come in at a lower price than the previous one. Starting next year, the price cap is gone, with developers free to charge whatever they want.

Even with the price cap gone, the market dynamics are unclear. SouthCoast Wind, as part of its effort to justify termination of its existing contracts, commissioned a third-party report on the offshore wind industry. The report said that prior to the pandemic and the war in Ukraine the assumption was that the wind industry would expand rapidly in an environment where capital costs and energy prices would be declining and financing would be plentiful.

That’s no longer the case, according to the report. “This is not an industry that is in a healthy and mature state,” the report said. “The overall conclusion of the report is that the costs of building and operating offshore wind farms have likely increased well above 20 percent since 2019, in addition to the significant increase in financing costs. The economics and ability to fund offshore wind in the US has been adversely impacted. It will take several years and significant investment to overcome some of these challenges.”

There is also fear that the current market challenges in offshore wind are going to stick around for awhile, so the current problems may not just be a brief bump in the road.

A third-party report commissioned by the offshore wind development team of Equinor and BP raised concerns about a logjam of offshore wind projects building up around the world that are putting intense pressure on the industry’s already fragile supply chain.

“On top of challenging macroeconomics, the offshore wind sector is approaching a longer lasting challenge of ramping up significantly to match both government and developer ambitions for offshore wind. Meeting the demand for offshore wind will expose the sector to longer-lasting supply chain constraints,” the report said.

In short, the problems being experienced in Massachusetts right now may be the tip of a much larger iceberg that could slow down the offshore wind industry for years to come.