Offshore

Turbulent US offshore wind market suffers another blow with latest PPA termination

Turbulent US offshore wind market suffers another blow with latest PPA termination
Rough seas near the Block Island Wind Farm offshore Rhode Island. (Image: Dennis Schroeder / NREL)

Avangrid and Connecticut utilities have agreed to terminate a long-term power purchase agreement for a Massachusetts offshore wind project citing economic conditions that left the project “unfinanceable,” according to the developer.

Avangrid plans to rebid the 804 MW Park City Wind project, which had previously secured 20-year PPAs with Eversource Energy and United Illuminating. United Illuminating is an Avangrid subsidiary.

The announcement is the latest sign of turbulent conditions for the offshore wind industry in the U.S.

In July, Avangrid agreed to pay $48 million to pull out of a PPA with Eversource Energy, National Grid, and Unitil for another offshore wind project, the 1,223 MW Commonwealth Wind located 20 miles south of Martha’s Vineyard. Rhode Island Energy, meanwhile, terminated its PPA with Ørsted and Eversource for the offshore wind farm Revolution Wind 2.

Avangrid said it had been “transparent and collaborative” with the utilities, as well as state and federal officials, as it sought to salvage the PPAs for Park City Wind.

“One year ago, Avangrid was the first offshore wind developer in the United States to make public the unprecedented economic headwinds facing the industry including 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,” the company said in a statement on Oct. 3.

While macroeconomic headwinds have plagued many of the first offshore wind projects in the U.S., Avangrid’s Vineyard Wind project is moving forward with construction having narrowly avoided the rough conditions that have plagued others.

The 800 MW project offshore Massachusetts is expected to become the country’s first large-scale offshore wind project once it’s completed. In July, Vineyard Wind installed an offshore substation.