ARKANSAS, Oct 4 (Future Headlines)- In a significant development for the offshore wind industry in the United States, Avangrid and Connecticut utilities have jointly decided to terminate a long-term power purchase agreement (PPA) for the Massachusetts offshore wind project known as Park City Wind. This decision was made due to economic conditions that rendered the project “unfinanceable.”
The Park City Wind project, with a planned capacity of 804 MW, had previously secured 20-year PPAs with Eversource Energy and United Illuminating, the latter being a subsidiary of Avangrid. However, the challenging economic environment facing the offshore wind sector has compelled Avangrid to rebid the project.
This announcement reflects the ongoing turbulence within the U.S. offshore wind industry. In July, Avangrid reached an agreement to pay $48 million to withdraw from a PPA with Eversource Energy, National Grid, and Unitil for another offshore wind project, the 1,223 MW Commonwealth Wind, situated 20 miles south of Martha’s Vineyard. Rhode Island Energy also terminated its PPA with Ørsted and Eversource for the offshore wind farm Revolution Wind 2.
Avangrid emphasized its transparency and collaboration with the utilities, as well as state and federal officials while attempting to salvage the PPAs for the Park City Wind project. The company cited economic headwinds that it had publicly disclosed a year earlier, which included record inflation, supply chain disruptions, and significant interest rate hikes. The cumulative impact of these factors made it unfeasible to finance the Park City Wind project under its existing contracts.
While macroeconomic challenges have affected several early offshore wind projects in the U.S., Avangrid’s Vineyard Wind project has managed to advance its construction, narrowly avoiding the difficulties encountered by others.
The Vineyard Wind project, with a capacity of 800 MW and located offshore Massachusetts, is on track to become the country’s first large-scale offshore wind project upon completion. In July, Vineyard Wind achieved a significant milestone by installing an offshore substation.
These developments underscore the complexities and uncertainties faced by the U.S. offshore wind industry as it seeks to establish itself as a major contributor to the nation’s renewable energy portfolio. Economic challenges and regulatory considerations will continue to play a pivotal role in shaping the future of offshore wind projects in the United States.
Reporting by Kevin Wood; Editing by Sarah White