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At the state's deadline to commit or back away, the developer behind the largest single offshore wind farm in the Massachusetts pipeline said Monday that it "believes there is a path forward" for the project it said last month was "no longer viable," but suggested that its Commonwealth Wind effort still will need to "find a solution to the unprecedented economic challenges" it faces.
Sy Oytan, senior vice president of offshore projects for Commonwealth Wind parent company Avangrid, said in a statement that the developer had filed a notice Monday with the Department of Public Utilities "so that we can continue to engage in ongoing discussion with all parties" around the economic headwinds that have changed the calculus around the 1,200 megawatt wind farm and its financing.
"Throughout this proceeding, Avangrid has been clear that its Commonwealth Wind project provides the most substantial clean energy opportunity for the region to take on climate change, create thousands of jobs, and help New England meet its significant reliability challenges. ... We have been transparent and committed, at all times, to doing everything we can to move the project forward, including coming to the table with all parties to find a solution to the unprecedented economic challenges facing this major infrastructure project," Oytan said in a statement. He added, "Ensuring Commonwealth Wind is able to move forward is squarely in the public interest and the best possible outcome for Massachusetts and its ratepayers, and we look forward to continued engagement so this project can deliver on its immense economic and environmental benefits and help the state achieve its ambitious 2030 climate target."
Commonwealth Wind was tapped last year alongside Mayflower Wind to advance Massachusetts' offshore wind portfolio. Project officials asked the state late last month to pause its review of the contracts between the two projects and the state's utility companies, saying the Commonwealth Wind project could only move ahead if the contracts filed in May are amended. The developer blamed inflation, interest rate hikes and supply chain issues for altering the project's financial picture.
The DPU rejected that request and took exception to some of the developer's tactics in an order issued Nov. 4 and gave the wind developers a Monday deadline to either commit to their contracts or pull them from DPU review. Last week, Mayflower Wind told state regulators that it "intends to move forward" with the offshore wind contracts it agreed to this year, but also said that it will share with the state and utility companies an outside analysis of "challenges to financeability, with the goal of finding solutions that provide value to the rate payers."
In its own filing Monday, Commonwealth Wind said that DPU "should not dismiss the proceedings as to the power purchase agreements" between it and the state's electric distribution companies. But the company also told state regulators that it "strongly believes that it is in the public interest to allow the parties to negotiate PPA contract amendments that allow Commonwealth Wind's offshore wind generation project ... to be economically viable, to obtain financing and to proceed to construction and, finally, to deliver Massachusetts customers cost-effective renewable energy at prices that would be lower than alternatives."
"If the Department does not support a pause in these proceedings, as previously requested by Commonwealth Wind, then the appropriate action is for the Department to continue with this proceeding such that the parties can continue ongoing discussions to employ all opportunities, including contract improvements, to achieve a financeable and economically viable Project," Commonwealth Wind wrote.
State Rep. Jeff Roy, who has worked extensively to bring the projects forward, note that the legislature spent a great deal of time setting up a process for robust review of competitive bids and power purchase agreements that commit the parties to long term contracts. "These agreements all involve sophisticated companies and thus it is important that we maintain the integrity of that process and that all parties deliver on what they promised," he said. These projects and the associated power purchase agreements, Roy noted, are integral to the state's ability to reach its climate goals, "and it is vital that they move forward."
"That being said, I believe there are avenues available under the federal Inflation Reduction Act and Massachusetts own Clean Energy and Offshore Wind bill that can help Commonwealth Wind mitigate the impacts of the recent global commodity price increases and proceed with the project," he stated. In that regard, Roy urged the companies to closely examine the legislation, look at all potential cost saving measures, tax incentives, improvements to project efficiencies, and other potential sources that will allow the project to advance.
"I am encouraged that Commonwealth Wind remains committed to the project and believe that it can and should proceed as intended by the parties,” he added.
The contract amendments Commonwealth Wind is seeking would make its power more expensive, though the developer insists the increase would be modest. Changes could also push the project's operational date back from 2027 to 2028. Avangrid executives have already said the project's go-live date would be delayed to 2028, but DPU pointed out in its order this month that the contracts as agreed-to call for a Nov. 1, 2027 commercial operating date.
There is also a major hurdle to contract renegotiation: the utility companies that have already agreed to buy Commonwealth Wind's power have told the state they "do not intend to renegotiate" with the wind developer.
In a letter she sent Sunday, Energy and Environmental Affairs Secretary Beth Card said that the federal and state government have taken actions to "directly address" the kinds of macroeconomic challenges that Avangrid says have complicated Commonwealth Wind.
"For example, the Federal Inflation Reduction Act expanded tax credits for offshore wind developers and the guidance for these key provisions are in development at the Department of Treasury. We are committed to working with you and other offshore wind developers to take advantage of all the federal incentives available to facilitate the growth of offshore wind," Card wrote to Avangrid CEO Pedro Azagra Blázquez. "Further, my team will continue, as it has for the last months, to make ourselves available to Avangrid and all offshore wind developers to strategize on ways to ensure progress, including capitalizing on state and federal investments."
The secretary added, "Thus, in turn, I encourage Commonwealth Wind to devote every resource at its disposal and consider all opportunities available so this project can proceed under the current contracts and I will encourage all pertinent parties to meet to understand the specifics of the financial challenges."
Massachusetts is relying on offshore wind power generation to be a major contributor to its decarbonization goals over the next three decades, not to mention billions of dollars in projected savings for electricity customers.
As things stand, the roughly 800 MW Vineyard Wind project is expected to come online as the nation's first utility scale offshore wind farm by the end of next year. Mayflower Wind has a pending request to combine its two projects into one 1,200 MW "SouthCoast Project" would come online by 2028. Commonwealth Wind would come online in 2028, the company has said.
Regarding the other major wind project, also called into question recently, Roy said the same applies to all participants in the process. "I just finished up a meeting with the folks at Mayflower and they are committed to moving forward and certainly understand the process we put in place," he added.
"All of this will eventually land on the plate of the new incoming administration," Roy continued, "but as I said last week, we must maintain the integrity of that process and expect that all parties deliver on what they promised."
--SHNS/Franklin Observer
