June 12, 2023 — A second Massachusetts wind farm developer has hit economic headwinds and decided to renege on its contracts. Could Rhode Island’s projects be next to fall?
State officials and offshore wind proponents say no.
Instead, they have brushed off the news that Massachusetts wind farm developer Southcoast Wind Energy LLC (formerly known as Mayflower Wind) wants to scrap its agreements to sell 1,200 megawatts of electricity to the Commonwealth amid rising project costs.
“It’s just part of the regular business cycle we’re dealing with,” said Patrick Crowley, a union organizer and co-chairman of Climate Jobs Rhode Island. “Construction projects are always trying to negotiate their contracts. It’s just part of the business.”
Indeed, the SouthCoast Wind farm – a joint venture by Shell and Spanish company Ocean Wind – is hardly the only development project hurt by inflationary cost hikes and supply chain slowdowns. Another Massachusetts wind farm developer, Avangrid Renewables, ended its existing contracts with state utility companies for the Commonwealth Wind project in 2022 for similar cost concerns.
For SouthCoast, the payments from utility companies it negotiated in 2019 just don’t work anymore. A third-party analysis shows construction and operation costs have spiked more than 20%, according to Southcoast Wind Energy CEO Francis Slingsby.
“The existing PPAs will not attract the financing necessary to construct the Clean Energy Resource and Project because they are low-priced, have no indexation and thus offer no way to overcome the significant and unforeseen economic challenges,” Slingsby wrote in June 2 testimony to Rhode Island regulators.
Both Southcoast and Avangrid plan to rebid for new power purchase agreements in Massachusetts in the hopes of getting more money from the utility companies.