Rough seas ahead as multiple offshore wind power purchase agreements are scrapped
Offshore

Rough seas ahead as multiple offshore wind power purchase agreements are scrapped

Economic uncertainties have resulted in multiple East Coast offshore wind power purchase agreements (PPAs) coming to an end, with both developers and utilities deciding to back out of the agreements.

Rhode Island Energy has pulled out of its PPA with Ørsted and Eversource for the offshore wind farm Revolution Wind 2, citing higher interest rates, increased expenses, and questionable federal tax credits, Offshore Wind reports. The decision was made after a four-month evaluation process, Rhode Island Energy said, and the utility ultimately concluded that the contract costs had become uneconomical.

In Massachusetts, the developers of the offshore wind project were the ones to pull out. The Iberdrola-owned Avangrid, the developer of the Commonwealth Wind offshore farm, requested to terminate the PPA signed with Eversource Energy, National Grid, and Unitil in 2022, Commonwealth Magazine reports. Avangrid will pay $48 million in penalties to the three utilities for backing out of the PPA, which had been under review since spring 2022. The utilities have agreed to end the agreement, WWLP reports, and the termination is awaiting approval from state lawmakers.

Similarly, Shell and Ocean Winds North America have decided to attempt to terminate the PPA for the SouthCoast Wind offshore wind project, with expected penalties of at least $60 million.

The developers of Commonwealth Wind and SouthCoast Wind both cited inflation, higher interest rates, supply chain issues, and the war in Ukraine in their determinations. These developers are expected to re-bid their projects to achieve more favorable agreements.

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