'Too expensive' | US state refuses lone offshore wind bid by Orsted JV on cost concerns
Four-month review by main utility and Rhode Island regulators found that economic benefits did not outweigh legally mandated affordability requirements
Citing cost concerns, the US state of Rhode Island’s main energy utility has decided not to advance the single project proposal submitted into a second solicitation for offshore wind capacity.
The JV is already contracted to send 400MW of its 704MW Revolution Wind 1 project to the Ocean State, with the remainder heading to neighbouring Connecticut.
After a four-month evaluation utility Rhode Island Energy said it concluded that the JV's proposal did not meet legal requirements “‘to reduce energy costs’ and other factors that scored low in the evaluation”.
The state’s 2014 Affordable Clean Energy Security (Aces) law compels it to make “cost effective, strategic investments in energy resources and infrastructure”, according to the text, to enable system reliability and ensure that environmental and economic benefits outweigh costs.
CEO David Bonenberger said: “The economic development benefits included in the proposal were weighted and valued appropriately by our evaluation team, but ultimately it was determined those features did not outweigh the affordability concerns and other Aces standards.”
State regulators including the Office of Energy Resources and Division of Public Utilities contributed to the findings by the utility, which declined to reveal the bid price in the proposal.
The utility attributed the bid’s high prices to rising interest rates, increased costs of capital and supply chain expenses, “as well as the uncertainty of federal tax credits”.
“Those costs were ultimately deemed too expensive for customers to bear and did not align with existing offshore wind PPAs [power purchase agreements],” Rhode Island Energy said.
Bonenberger added that the move “doesn’t mean we are abandoning our commitment to offshore wind in Rhode Island.”
The utility is “already in discussions with state and regional leaders about new opportunities to bring more offshore wind”, he said.