Offshore

Rhode Island offshore wind farm can’t proceed without new PPAs, siting board says

Rhode Island offshore wind farm can’t proceed without new PPAs, siting board says
Rough seas near the Block Island Wind Farm offshore Rhode Island. (Image: Dennis Schroeder / NREL)

A Rhode Island offshore wind project has been stalled after a state siting board said the project developer needs to demonstrate financial viability before being able to proceed.

The Energy Facility Siting Board (EFSB) ruled that the 1,200 MW SouthCoast Wind must present new power purchase agreements for its application to proceed after original offtake agreements between the developer and Massachusetts utilities were scrapped.

SouthCoast Wind filed an appeal with the Rhode Island Supreme Court on July 27.

Rebecca Ullman, SouthCoast Wind’s director of external affairs, said the EFSB decision “puts stress on the project timeline and investment profile of future projects in New England and elsewhere.”

The American Clean Power Association trade group went a step further, adding that the potential of a “lengthy” pause threatens Rhode Island’s position as a leader in offshore wind.

“Siting and permitting, as well as power sales, are necessary ingredients in moving projects forward. They must run in parallel, not have one wait for the other,” ACP vice president of offshore wind Josh Kaplowitz said in a statement.

The original PPAs rendered SouthCoast Wind inviable due to macroeconomic headwinds like inflation and higher interest rates, as well as supply chain constraints caused by the war in Ukraine, the company said in filings. Additionally, SouthCoast Wind, a joint venture between Shell and Ocean Winds, argued a delay imposed by the EFSB would be harmful to both project development and public policy goals.

SouthCoast Wind said it looks forward to reviewing responses to requests for proposals in Connecticut and Massachusetts as it seeks new offtake agreements.

The burgeoning offshore wind industry in the U.S. is supported by President Joe Biden’s goal of 30 GW of capacity by 2030 — a goal industry analysts expect the administration to achieve. But economic uncertainties have imperiled some of the first projects in development.

In addition to SouthCoast Wind, 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.

Meanwhile, the Iberdrola-owned Avangrid, the developer of the Commonwealth Wind offshore farm, requested to terminate its 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.