New England states join to buy offshore wind power as US industry struggles

Unitil

04/10/2023 20:36

Oct 4 (Reuters) - Three U.S. states in New England -
Massachusetts, Rhode Island and Connecticut - on Wednesday
agreed to jointly procure offshore wind power as soaring
interest rates and rising equipment and labor costs have made
some projects uneconomic.
    By joining forces, the states hope to counter the pain
rippling across the nascent U.S. offshore wind industry, which
is expected to play a key part in decarbonizing the power sector
and revitalizing domestic manufacturing.
    Earlier this week, another offshore wind developer canceled
agreements to sell power to local utilities - this time in
Connecticut - because the previously agreed upon prices for that
power was too low to cover the rising cost of building the
project.
    Massachusetts Governor Maura Healey announced the agreement
between the three states at the American Clean Power
Association’s Offshore WINDPOWER Conference in Boston, according
to a press release on the governor's website.
    The three states will seek multi-state offshore wind
proposals for selection in 2024 for up to 6,000 megawatts (MW)
of power.
    Any two or three states may agree to select a multi-state
proposal and split the anticipated megawatts and renewable
energy certificates from a single project.
    One megawatt can power about 1,000 U.S. homes.
    
    CANCELED CONTRACTS
    On Monday, Avangrid  AGR.N , a U.S. subsidiary of Spanish
energy firm Iberdrola  IBE.MC , said it filed agreements with
power companies in Connecticut to cancel power purchase
agreements for Avangrid's proposed Park City offshore wind
project.
    “One year ago, Avangrid was the first offshore wind
developer in the United States to make public the unprecedented
economic headwinds facing the industry," Avangrid said in a
release.
    Those headwinds include "record inflation, supply chain
disruptions, and sharp interest rate hikes, the aggregate impact
of which rendered the Park City Wind project unfinanceable under
its existing contracts," Avangrid said.
    Avangrid has said it planned to rebid the Park City project
in future offshore wind solicitations.
    Also over the past week, utility regulators in Massachusetts
approved a proposal by SouthCoast Wind, another offshore wind
developer, to pay local power companies a total of around $60
million to terminate contracts to provide about 1,200 MW of
power.
    Those Massachusetts power companies include units of
Eversource Energy  ES.N , National Grid  NG.L  and Unitil
 UTL.N .
    SouthCoast Wind, formerly known as Mayflower Wind, is owned
by units of Shell  SHEL.L  and Ocean Winds. Ocean Winds is owned
by units of Portuguese energy company EDP Energias de Portugal's
 EDP.LS  majority-owned EDP Renováveis  EDPR.LS  and France's
ENGIE  ENGIE.PA .

 (Reporting by Scott DiSavino; Editing by Aurora Ellis)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters
Messaging: scott.disavino.thomsonreuters.com@reuters.net))