Massachusetts approves US offshore wind contracts despite Avangrid’s call for dismissal
Surging inflation and rising interest rates have converged to put low-priced projects in the pioneering state at risk
Massachusetts regulator the Department of Public Utilities (DPU) approved offtake contracts for the 1.2GW project under development by Iberdrola-backed Avangrid as well as Mayflower Wind’s 405MW array in an order released today (Friday).
“Avangrid is disappointed in the order issued by the DPU today,” said Craig Gilvarg, Avangrid spokesperson, maintaining the company position that the current PPAs violate Massachusetts law requiring offshore wind projects be financeable.
Commonwealth was selected in the state’s third tender with a bid of $72/MWh, while Mayflower – a joint venture (JV) of Shell and Ocean Winds – won its capacity with a $75/MWh offer.
The developers signed 20-year PPAs with three utilities, Eversource, National Grid, and Unitil, which were submitted for review to state officials to ensure they “meet the requirements of law and deliver reliable and clean energy at an affordable price”, according to DPU.
Avangrid ultimately moved to dismiss the contracts earlier this month and have Commonwealth’s capacity applied to Massachusetts’ upcoming tender in the spring.
“The best path to move the project forward as expeditiously as possible is through Massachusetts’ forthcoming offshore wind solicitation this spring,” said Gilvarg.
In denying Commonwealth’s motion, DPU said that Commonwealth failed “to justify review of the PPAs” and “ordered that the PPAs between [the utilities] and Commonwealth Wind [and] Mayflower Wind are approved”.
Gilvarg said that Avangrid “continues to review the DPU’s decision while assessing its legal options”.
Mayflower did not respond to requests for comment as of time of publication.
Future price impacts
Commonwealth is the first major US project to walk away from a signed PPA but might not be the last as global economic conditions continue to negatively impact long-term offshore wind PPAs.
“Offshore wind as a new a new industry is not immune to the impacts of global economic trends and certainly rising prices worldwide have had an impact,” said Josh Kaplowitz, head of trade group American Clean Power Association’s offshore wind unit.
Avangrid’s efforts to gain a higher PPA will give developers “food for thought going into upcoming state solicitations”, said Wood Mackenzie senior wind analyst Samantha Woodworth.
Several states are slated for offshore wind tenders next year, including New York, New Jersey and Massachusetts, and the industry will be watching for Commonwealth’s impact on future prices.