SouthCoast Wind Will Pay $60 Million To Terminate Power Purchase… - Nantucket Current
Nantucket Current | SouthCoast Wind Will Pay $60 Million To Terminate…
SouthCoast Wind Will Pay $60 Million To Terminate Power Purchase Agreements
Jason Graziadei •
While Vineyard Wind’s turbines are rising in the waters off Nantucket, another offshore wind energy developer seeking to build an even larger wind farm south of the island is facing a major setback.
SouthCoast Wind, which hopes to construct 149 offshore wind turbines 20 nautical miles south of Nantucket, is attempting to back out of the power purchase agreements it had signed with three Massachusetts utility companies.
In a petition filed this week with the state Department of Public Utilities, SouthCoast Wind stated it would pay dearly to terminate those agreements. The offshore wind company - which is a joint venture of the petrochemical giant Shell and Ocean Winds North America - agreed to pay $60 million to rip up its deals with Eversource, National Grid, and Unitil.
“Closing these contracts was never the plan but impacts of COVID-related supply chain disruptions and the war in Ukraine made them unfinanceable,” said SouthCoast Wind spokesperson Martha Keeley. “This development enables SouthCoast Wind to move forward and to compete in upcoming solicitations. The project is full steam ahead - we have budgeted $100 million this year alone to advance our project, and our federal, state, and local permitting is progressing.”
The $60 million payment by SouthCoast Wind to the three utility companies must be approved by the Department of Public Utilities. If it gets sign-off from the state agency, SouthCoast Wind would then rebid the project next year.
The lease area for SouthCoast Wind's proposed offshore wind farm is just one of numerous swaths of federal waters that have been carved up and auctioned off by the federal government. The Vineyard Wind project is the farthest along at this point.
SouthCoast Wind believes its project has the potential to generate over 2,400 megawatts (MW), or enough to power over 1 million homes. Its wind turbines would occupy a 199-square mile area, which was awarded through a competitive auction by the US Bureau of Ocean Energy Management. The 149 wind turbines would transfer power through two cables making landfall at connection points at the Brayton Point/Somerset area of Buzzards Bay, and in Falmouth.
Representatives from SouthCoast Wind visited Nantucket back in February and received a tepid response, including one island resident who dressed up as a whale in protest.
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.