Avangrid Terminates Power Purchase Agreements for Another US Offshore Wind Project | Offshore Wind - Offshore WIND
Avangrid Terminates Power Purchase Agreements for Another US Offshore Wind Project | Offshore Wind
Avangrid Terminates Power Purchase Agreements for Another US Offshore Wind Project
Avangrid, a member of the Iberdrola Group, and the Connecticut Electric Distribution Companies have agreed to terminate power purchase agreements (PPAs) for the Park City Wind offshore project.
The developer said it plans to rebid the 804 MW Park City Wind in the upcoming auctions.
”One year ago, Avangrid was the first offshore wind developer in the United States to make public the unprecedented economic headwinds facing the industry including record inflation, supply chain disruptions, and sharp interest rate hikes, the aggregate impact of which rendered the Park City Wind project unfinanceable under its existing contracts,” Avangrid said.
”Since that time, Avangrid has been transparent and collaborative, working diligently with state and federal officials and stakeholders to find solutions to the economic challenges facing Park City Wind as we continued to advance the permitting and development of the project. After exploring all potential solutions to the financial challenges facing the project, and engaging in good-faith and productive discussions with Connecticut state officials regarding these challenges, it is clear the best path forward for Park City Wind is in the termination of the Power Purchase Agreements and a rebid of the project.”
Earlier this year, Avangrid and the Massachusetts electric distribution companies agreed to terminate the PPAs for the 1.2 GW Commonwealth Wind offshore wind project, with Avangrid agreeing to pay USD 48 million in penalties for the termination.
Similarly to Park City Wind, the decision to terminate the PPAs for the Commonwealth Wind project was made due to ”historic price increases for global commodities, sharp and sudden increases in interest rates, prolonged supply chain constraints, and persistent inflation”.
Avangrid plans to rebid the Commonwealth Wind project in the upcoming auctions as well.
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Avangrid, in cooperation with Copenhagen Infrastructure Partners, is also the developer of the 804 MW Vineyard Wind 1, the first commercial-scale offshore wind farm in the USA. Turbine installation is currently ongoing at the site some 24 kilometres off the coast of Massachusetts.
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Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.