Dive Brief:
- Avangrid has filed settlements with Connecticut electric distributors Eversource Energy and United Illuminating that, if approved, would cancel the power purchase agreements for the 804-MW offshore Park City Wind project.
- Financial challenges triggered by supply chain disruptions, rising interest rates and other factors rendered the Park City Wind project “unfinanceable under its existing contracts,” Avangrid said Monday.
- Massachusetts regulators approved the termination of PPAs tied to the 1,200-MW SouthCoast Wind project, an offshore development by Shell New Energies and Ocean Winds North America, on Friday in what's just the latest rash of offshore wind contract cancelations.
Dive Insight:
Two more offshore wind projects are re-entering the PPA market as the offshore wind sector experiences another wave of contract cancelations.
If the termination agreements are approved by the Connecticut Public Utilities Regulatory Authority, Avangrid would pay about $16 million to exit PPAs tied to the Park City Wind project off the coast of Martha's Vineyard. According to Monday's filings, the project has been unable to secure financing and will not be built unless Avangrid is released from its existing contracts.
Avangrid plans to rebid the project, according to the company.
SouthCoast Wind made a similar case to the Massachusetts Department of Public Utilities. SouthCoast Wind agreed to pay more than $60 million to be released from the contracts in a deal that garnered support from the state's Department of Energy Resources.
“At this time, granting approval of the Termination Agreements is critical to the future viability of the South Coast Wind Project and provides ... short term rate relief to the ratepayers in the Commonwealth,” the Massachusetts Department of Energy said in comments on the proposed settlement.
But the termination of the SouthCoast PPAs led Massachusetts Attorney General Andrea Joy Campbell to call for additional safeguards to protect ratepayers against future cancelations.
Ratepayer protections built into the original contracts, “proved to be illusory as SouthCoast Wind determined that $60 million ‘Termination Payments’ are a preferred business approach to performing on its contractual obligations,” a letter from the Massachusetts Attorney General says. “As a result, in future solicitations ... ratepayers will be asked to pay for what are very likely to be significantly more expensive PPAs with no commensurate benefits to compensate ratepayers for the increased costs and risks they must shoulder.”
In a statement to Utility Dive, SouthCoast Wind director of external affairs Rebecca Ullman said the company plans to move forward with the project and bid into upcoming solicitations. New England alone, she said, is nearing 5 GW of procurement demand.
SouthCoast and Park City are far from the only offshore wind developments to exit PPAs this year. Avangrid filed termination agreements for the proposed 1,223-MW Commonwealth Wind farm in July, the same month that Rhode Island Energy announced that it would not move forward with an offshore wind PPA with Ørsted and Eversource.
