- An Avangrid subsidiary on Friday asked Massachusetts regulators to dismiss their review of power purchase agreements tied to the 1,223-MW Commonwealth offshore wind farm, saying the $72/MWh PPAs are no longer viable because of inflation and other economic disruptions and supply chain problems.
- Eversource Energy, National Grid and Unitil refused to renegotiate the 1.2-GW PPAs, Commonwealth Wind, the subsidiary, said, noting it plans to rebid the project in an upcoming solicitation, according to a filing at the Massachusetts Department of Public Utilities.
- The filing “illustrates how quickly the economics of such projects can seem to change in the current environment, and apparently how resistant the Massachusetts [utilities] are in accommodating the project’s renegotiation efforts,” Paul Patterson, a Glenrock Associates equity analyst, said in an email.
The Commonwealth wind farm was under contract to Eversource Energy, National Grid and Unitil as part of Massachusetts’ goal of adding 5.6 GW of offshore wind. The wind farm was set to start operating in 2028.
The Commonwealth project cannot be financed and built under the current PPAs, according to Avangrid.
“Among other factors, the prolonged war in Ukraine has unsettled markets and increased costs for many products, inflation has been persistent, interest rates have increased in a manner unprecedented in recent times, commodity prices have risen sharply and supply shortages and supply-chain constraints once thought to be temporary remain pervasive,” Commonwealth Wind said.
Also, cost increases for offshore wind equipment, such as turbines, have been “unprecedented,” Commonwealth Wind said.
“The best path forward to advance the purposes of … the commonwealth’s clean energy goals is for the offshore wind energy generation capacity currently included in the PPAs to be procured in the next solicitation under Section 83C,” Commonwealth Wind said.
Commonwealth Wind plans to bid into the solicitation, set for April, and offer its project with “cost-effective pricing, a superior timeline for completion, and exceptional economic development opportunities,” the company said.
Renewable energy developers around the United States have been moving to renegotiate recent PPAs that have been disrupted by supply chain bottlenecks and other economic challenges. Pacific Gas & Electric, for example, in September asked the California Public Utilities Commission to approve price hikes for PPAs tied to four battery storage projects totaling 580 MW.
Avangrid Renewables, Avangrid’s renewable energy arm, is also renegotiating solar, onshore wind and offshore wind contracts, Pedro Azagra Blázquez, Avangrid CEO, said during an Oct. 26 earnings conference call.
Avangrid and Copenhagen Infrastructure Partners are building the 800-MW Vineyard Wind 1 wind farm near Martha's Vineyard and Nantucket. The project is on track to begin producing electricity late next year and be complete in 2024, according to Avangrid, which expects to spend $3.7 billion on its 50% share of the project.