Avangrid to pay $49m to cancel deal for 1.2GW Massachusetts offshore wind project
Shell-Ocean Winds joint venture also looking to follow suit with both developer groups expected to rebid their projects' capacity in state’s round 4 tender.
Iberdrola-controlled Avangrid has agreed to pay $48.9m in fines to the US state of Massachusetts to terminate its contracted 1.2GW Commonwealth Wind project which it claims is no longer financially viable.
Surging inflation and interest rates have since buffeted the industry, pushing the developer to request its power purchase agreements (PPAs) “be terminated because the facility is no longer financeable”, according to the agreement filed by the state Department of Public Utilities (DPU).
Commonwealth and the utilities “have agreed to amend the Agreement to provide for the consensual termination”, it said.
The developer will pay Eversource $25.9m and National Grid $21.6bn, with another $480,000 to Fitchburg, reflecting the relative scale of the PPAs.
The JV’s first 804MW were awarded in the state's round 2 in 2020 at $77.76/MWh, while the remaining 405MW procured in 2021 were signed at $75/MWh.
“We remain focused on obtaining our federal, state, and local permits and look forward to future procurements in New England.”
Following testimony by Slingsby last month that it intends to withdraw the project, the permitting board of neighbouring Rhode Island yesterday (17 July) denied its permit to run an export cable through state waters, calling the array “hypothetical”.
SouthCoast's construction and operations plan calls for its export cable to run through Rhode Island state waters on the way to its point of interconnection at the former coal-fired power plant at Brayton Point in Somerset, Massachusetts.
The project will have one year to reapply once new PPAs are in place.
The cancellation of both Commonwealth and SouthCoast would remove all but the 800MW Vineyard Wind 1 currently under construction from the state’s pipeline, potentially delaying it from reaching its mandate of 5.6GW contracted by 2027.
The termination agreement between Avangrid and the utilities “is not intended to be and shall not be construed as an admission by either Party of any liability” and frees all parties of further obligations.
It will go into effect immediately upon approval by the DPU, expected soon, starting a countdown for payment.
The fines must be paid within 15-days of the DPU’s approval, without which the original PPAs go back in force.
The agreement is also “final and binding, regardless of any claims of misrepresentation, concealment of fact, or mistake of law or fact”, according to the filing.
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