Commonwealth Wind has faced significant economic headwinds.
Tim Johnson

Commonwealth Wind Asks State to Pull Project Contracts

The company behind a large commercial wind farm planned for south of Martha&rsquo;s Vineyard has requested to pull its project contracts, citing rising construction costs and an inability to renegotiate pricing.</p>

After months of back-and-forth, the company behind a large commercial wind farm planned for south of Martha’s Vineyard has requested the state pull its project contracts, citing rising construction costs and an inability to renegotiate pricing.

Avangrid, the parent company of Commonwealth Wind, as well as two other industrial-scale offshore wind farm projects planned for south of the Island, said in a filing Friday with the state Department of Public Utilities that its 1,200 megawatt development was no longer commercially viable, and that the state should dismiss its current power purchasing agreements.

“Unfortunately, despite diligent efforts by Commonwealth Wind to find a path forward for the Project…the project cannot be financed and built under the current [power purchasing agreements],” the filing reads in part.

In its filing Friday, Avangrid requested that the state instead include the 1,200 megawatts of wind energy planned for the Commonwealth Wind development in its next round of offshore wind solicitation, which is set to occur this upcoming spring. Avangrid said that it would rather open up a new, competitive bidding process for the 1,200 megawatts of energy generation than proceed with its current agreements, which were signed in spring of 2022.

“At this juncture, the best option…is to dismiss this proceeding as to the [power purchase agreements] such that the offshore wind energy generation provided for in the [agreements] can be procured in the next solicitation,” the filing states. “No interest is advanced by approving power purchase agreements that cannot and will not lead to the development of offshore wind.”

Offshore wind companies negotiate complex pricing deals, called power purchasing agreements, with utilities prior to the start of project construction — a process that has to receive formal approval from the state. But Avangrid is now asking the state to toss its current proceeding, saying it can’t afford to build the project at its current price agreement.

Avangrid’s decision has the potential to throw the state’s ambitious green energy goals in flux, as well as lead to significant delays for the project, which was initially planned to go on-line in 2028. The state’s goals, which include achieving net-zero carbon emissions by 2050, partially hinge on the state’s ability to procure 3,200 megawatts of offshore wind energy by 2030.

“The Baker-Polito Administration is disappointed by Avangrid’s request to the Department of Public Utilities to dismiss the review of the Commonwealth Wind contracts," said Danielle Burney, a spokesman for the state's Executive Office of Energy and Environmental Affairs, "but remains committed to the deployment of commercial-scale offshore wind and advancing clean, affordable energy on behalf of the Commonwealth’s residents and businesses.”

The announcement from Avangrid comes three weeks after it said in a November filing that it did not wish to dismiss its power purchase agreements, despite significant financial turbulence that threatened the project’s viability. But after utility companies refused to renegotiate pricing, Avangrid reversed course on Friday, saying that the war in Ukraine and inflation had created unprecedented economic headwinds.

“The global economy has changed both dramatically and swiftly in ways that could not have been managed or predicted by Commonwealth Wind,” the filing states. “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.”

The company also cited data showing that the costs of building turbines had grown significantly, and would continue to rise, contrary to historic trends.

“Simply put, it is now far more expensive to construct the project than could have been reasonably foreseen even earlier this year,” Avangrid said.

If the state accepts Avangrid’s request and includes the 1,200 megawatts of energy in its next solicitation, there is no guarantee that Avangrid receives the winning bid. But the company expressed confidence that it would win out in a statement Friday, and blamed utility companies for refusing to renegotiate project pricing.

“Avangrid is committed to bidding Commonwealth Wind into that solicitation, and has the utmost confidence, given the advanced stage of the project and its inherent benefits, that it can address the current economic challenges facing the project and offer the most cost-effective pricing,” the statement said.

Vineyard Wind — an 800 megawatt wind farm planned for a northern section of a lease area shared with Commonwealth Wind — has started construction on its undersea cable that will connect the turbines to a switching station on Cape Cod. The project remains scheduled to go online in late 2023 or 2024.

Avangrid is the parent company of Vineyard Wind, as well as a third project south of Martha’s Vineyard called Park City Wind, which is sandwiched between Commonwealth Wind and Vineyard Wind in the shared lease area. Unlike the other two projects, Park City Wind is part of Connecticut’s offshore wind procurement process.

Comments

Submitted by Anonymous (not verified) on Mon, 12/19/2022 - 06:41

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i told you so edg

Electric rates will continue to rise here due to well intentioned politicians legislating financally devasting solutions. Demand for electricity is increasing (we are all supposed to get electric cars right?) Currently all electricity sold in MA must be 51% 'renewable'. The majority of remainder comes from reliable clean natural gas. Historically large businesses (off-island) have been subject to gas 'cut-offs' during periods of high demand, due to a constricted supply, and the priority is to heat homes or make electricity. This is 100% due to the politicians blocking a natural gas pipeline a few years ago that would have met the needs of New England consumers. A radical group in Maine blocked a transmission line that would have brought power from CLEAN Hyro Quebec to our grid. The Pilgrim nuclear plant was decommissioned (thankfully), but no new power plant was built to replace it. I Suggest the gazette take a look at the massive electric rate increases with the next billing cycle for the consumers on the vineyard. If your current supplier is the 'cape light compact'/'nextera', your bill will rise from 16.99kwh to 21.699kwh *28 % increase*. If eversource is your supplier it will rise from 17.871kwh to 25.649kwh an whopping *45 % increase'.

i told you so edg

To clarify, the new rate begins after this billing cycle, my meter reading on-island is late dec. So the new rates begin after that, and you readers won't be shocked until you receive the bill after the late January meter reading after you have been paying the massive increases for a month. You won't be able to change suppliers until after the NEXT reading (late February)so you will be dinged for at least 2 months unless you switch before the reading this month. Now is the time to explore your options.. Thats your free advice... early present for you. Happy Holidays!!!
add your month KW usage in the Upper RH corner to compare.
https://www.energyswitchma.gov/#/compare/2/1/02539//

Carol formerly Chilmark

@I Told You So: "Natural" gas (methane) is *not* clean; it is a very powerful warming gas in the atmosphere (responsible for around 30% of warming), though its lifespan is not forever like CO2 - more like 12 years (cit.: https://www.iea.org/reports/global-methane-tracker-2022/methane-and-cli…). We need offshore wind, because we all *do* need to stop burning fossil fuels - Edgartown is pretty flat, wouldn't take much sea level rise to swamp the whole town. I've had an electric car for 5 years (will get a new one next year), and they really don't pull that much electricity (surprising, but true). My whole house is electric, including heat (the new minisplits do a great job on heat!); I keep my house at 72 and I just got my bill - $400 - that's for everything in the house, including heat/hot water/cooking, AND fueling the car. Compare that with what you're spending for all of your energy bills - combined. I'll take that over my old oil heating bill any day.

Bob Edgartown

If you’re using any electricity off the grid, it is being supplied by fossil fuel in one way or another. All of our electricity needs an abundant supply in order to flow through the lines and the intermittent capacity of solar and wind is never enough to make electricity reach buildings. It needs the fossil fuel plants to keep the pumps turning. And it is not very green to be buying a new car every five or six years.

Carol Yarmouth Port

We've all experienced the inflation stemming from post-pandemic supply disruptions and the invasion of Ukraine (thanks Putin); it's dispiriting, though not surprising, that costs for these projects rose high enough to make them financially untenable for Avangrid and Commonwealth Wind. The Baker administration should have leaned on Mass DPU to renegotiate these power purchase agreements, AND our US Senators and Congresspersons should grab some of that federal money to cover the cost increases.

We need to switch to zero carbon electricity ASAP. That is a geophysical fact. It's incredible to me that there are those on the Cape and Islands, uniquely situated to be hammered by sea level rise (bye bye clean aquifers due to saltwater intrusion) that still don't get that.

long time seasonal resident mvy and mainland

If Putin is to blame, then why are consumers in NJ/NY paying 9.5-11.5c per KW hour, less than a THIRD that new england customers pay? Because Putin was not the one who blocked pipelines to bring natural gas to New England. Putin did not block the power line from Hydro Quebec, radical environmentals in Maine did.

Submitted by Anonymous (not verified) on Mon, 12/19/2022 - 07:10

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A person living in reality ON-Island

The power used to create, manufacture, transport, install, and maintain the wind turbine, far exceed the power produce by the wind turbine. It will be an eye sore, it will be a problem, it will cost hundreds of million, and at the end of the day, it won't work. Nuclear power is the only green energy that actually works.

Laurence Edgartown

What reality do you live in? Nuclear power is the most expensive to generate because of astronomical costs to build a plant and your claim of the cost of wind power has been debunked numerous times over the past decade.

Roddy Seasonal Visitor

Then why were those offshore wind projects just pulled off the table by the developers for not being commercially/economically feasible? Wind will NEVER be a dependable and sufficient enough source of energy to be practical. Nuclear plants may be outrageously expensive to build but are STILL the most cost effective.. and “green”.. energy option over the long haul.

Islander Too

There are plans in place to deal with storing nuclear waste.

Unlike the situation with used blades from wind "farms," used solar panels, used everything involved with this infrastructure---far more materials than I can easily list. No plans in place and the debris is being buried or just dumped. Pretty much like the situ artificial turf (ship it to Africa or somewhere).
https://www.bloomberg.com/news/features/2020-02-05/wind-turbine-blades-…

Please let readers know of the plans (and sources of funds) to reconstruct ruined and poisoned landscapes in Chile and elsewhere where lithium for lithium-ion batteries is mined. For more info search "Protests against lithium mining in Chile." Many of these lands to be destroyed are home to indigenous peoples. As usual.

Please let readers know of plans to recycle or otherwise dispose of batteries from their "clean" EVs.

As in so many other aspects, American consumers are happy to look the other way and virtue-signal while their own "eco-waste" is exported to the third world or to subsequent generations. And they are convinced that the "sacrifice" of today's ecosystems fotr the "renewable" infrastructure will be paid back by playing Canuck and God "holding back the tides" and the wildlife will "eventually" recover when CO2 emissions are tamed. Meanwhile these organisms are deprived of the opportunity to adapt and evolve so that H. sapiens 'EV' can pretend to adapt and evolve.

Submitted by Anonymous (not verified) on Mon, 12/19/2022 - 09:47

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Mark Edgartown

What a waste focusing on these uneconomical green energy projects. Meanwhile electrical rates are soaring for the everyday island resident.

Submitted by Anonymous (not verified) on Mon, 12/19/2022 - 11:57

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Virginia Jones WT

Anyone who thinks that nuclear power is green is delusional --look at the problems of dismantling Pilgrim over on the Cape! One facet of the whole issue is that no one seems to be willing to CONSERVE our power use and not just a little. We have to act responsibly and use FAR LESS electricity -- far less in fact of all natural resource. Even SOLAR is a problematic source of power but at least one can dispose of the various components without the toxic problems of nuclear rods and irradiated cooling water when it comes time to dispose of them. There are many other compelling facets to this. It isn't a simple fix although turning off the power and turning down other types of power consumption does help!

Mark Edgartown

Not realistic at all, power consumption is only going to increase at higher rates given the reliance on computing power in most aspects of our lives. There is no decarbonization of the electric grid without the use of nuclear power generation, full stop.

Submitted by Anonymous (not verified) on Mon, 12/19/2022 - 17:53

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James Kozak Vineyard Haven

Wouldn’t the contract include relevant “force majeure” clauses where unforeseen cost escalation allows them to renegotiate or disavow the contract without having to beg the Commonwealth?

Submitted by Anonymous (not verified) on Mon, 12/19/2022 - 18:45

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Rational Person Oak Bluffs

This is an example of the proverbial Canary in the Coalmine. Wind power is an unsustainable business model. It's incredibly expensive and will never compete with traditional sources of power. These projects will die on the vine. It's unfortunate that our state leaders have blocked clean, inexpensive energy natural gas lines into the state. Absolutely foolish. Elections matter but it's too bad the electorate doesn't fully educate themselves.

Submitted by Anonymous (not verified) on Tue, 12/20/2022 - 01:14

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Frank Brunelle Vineyard Haven

I have been following the news of this for quite a while and it is a tough situation - and expensive. Costs will rise substantially and forever with this system. But there is an alternative. In Ludlow VT they have their own power plant. It is substantially less expensive than the rest of Vermont and more reliable. In a recent storm Ludlow village was one of the only areas that retained power. The philosophy and administration for this solution goes back a century where a group of people in Ludlow formed a think tank and developed a philosophy and a way of attaining the goals they set for themselves of inexpensive reliable power - and it continues and is ever enhanced to this day. There are other options.

Submitted by Anonymous (not verified) on Tue, 12/20/2022 - 07:00

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island guy MV

profits. that’s what this is really about. The turbine company seeing the spike in electricity realizes that the margin is much higher now and they want a piece of that pie. they want to make more money. maybe there’s some truth to what they are saying about the increase in cost for development, but unless you’re on the developing side, you have no way to know if that’s true. Yes, we are all in for a crude reality check with electricity rates skyrocketing. time to live intentionally and not keep all the lights on. Sure glad I installed solar.

Submitted by Anonymous (not verified) on Tue, 12/20/2022 - 09:27

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Tom Delotto Edgartown

Fly over any part of the Country at night - like the Cape (I travel on business regularly ) and look down. Why are we as a country not focusing on turning off all that light pollution? - how much power could be conserved every second of every day ?
Look toward conservation efforts -

Submitted by Anonymous (not verified) on Tue, 12/20/2022 - 10:44

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Jose Oak Bluffs

So many of these so called green solutions require rare earth minerals which are largely controlled by China, are often located in geopolitically sensitive spots (3rd world nations), and which result in serious groundwater pollution in countries with lax pollution rules. But since this pollution is not carbon pollution, it apparently does not matter for those whose sole advocacy is carbon neutrality. I'm sure it matters, though, to those who live in the countries experiencing the pollution. Also, from a public policy standpoint, why would we ever want to make our country dependent on a country like China which is not our friend? Did we learn nothing from the 1970s and our dependency, at that time, on OPEC for our oil supplies which put our national security at risk? Like most complex problems in life, the solutions will be multifaceted and probably will be some combination of carbon, nuclear, green projects and new forms of innovation. Perhaps we should have more focus on analytics and market solutions, and less on the "climate change religion" which is overly simplistic and not sustainable.

Submitted by Anonymous (not verified) on Tue, 12/20/2022 - 10:51

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Sara Edgartown

This is too bad… the supply change shortage and raising costs is because of Putin and a crazy war.. it might be time to stop sending billions of dollars to Ukraine.

Submitted by Anonymous (not verified) on Tue, 12/20/2022 - 14:11

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Peter Norris Chilmark

I had a 30 panel roof mounted solar panel system installed several years ago. With Federal and MA incentives, the estimated cost breakeven time was about 6 years. This year, the system produced 8.5 MWh of power. My electric car charging station is powered by the array and the car consumed 1.25MWh [.25 kWh/mile x 5000 mi]. How about an annual tax incentive for all new house construction with south facing roofs? For every 1000 houses constructed or retrofitted with similar systems we'd have a home-grown source of 8,500 MWh of power, annually. So...?

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