Commonwealth Wind potentially began a new chapter this week as it secured regulatory approval to back out of its power purchase agreements with three Massachusetts utilities.
Also this week, the same regulators approved an offshore wind solicitation that will allow the project to be rebid at higher cost.
The milestone comes nearly a year after developer Avangrid first said it could not proceed with the 1,230 MW offshore wind project under the PPAs it had negotiated with Eversource, National Grid and Unitil.
After a flurry of motions, rulings and appeals, the parties announced a deal in July: Avangrid would pay a combined $48 million to the utilities, and they would support its motion to cancel the PPAs.
The Department of Public Utilities “stamp approved” the agreements Wednesday.
Avangrid has said it remains committed to the project — it just needs more money to follow through on it. It said it hopes to rebid in the next offshore wind solicitation.
A draft version of this solicitation was issued in May. It’s the Bay State’s fourth and, at 3,600 MW, its largest. The DPU approved it Wednesday with few changes (docket DPU 23-42).
The state Department of Energy Resources will issue it in final form soon, a spokesperson told NetZero Insider on Thursday. Bids will be due by Jan. 31.
The Commonwealth Wind saga is far from unique — many of the nation’s first wave of contracted offshore wind projects from Cape Cod to Cape May have run into major cost escalations and are seeking more money before committing to proceed.
However, Commonwealth was the first to attempt to back out and hit the reset button.
SouthCoast Wind is seeking to do the same thing with 1,200 MW of PPAs with the same three Massachusetts utilities, and also hopes to rebid in the fourth solicitation.
These developments cast a shadow on the offshore wind pipeline Massachusetts is counting on to help it achieve its clean energy goals. In almost any scenario, offshore wind now will be slower to come online or cost ratepayers more, or both.
But there are bright spots. Vineyard Wind is under construction off the Massachusetts coast. It’s expected to start exporting power to land this year and reach full 800 MW capacity in 2024.
And state officials remain committed to the goal of 5,600 MW procured by 2027.
Energy and Environmental Affairs Secretary Rebecca Tepper told NetZero Insider via email:
“We’re extremely confident in the future of the offshore wind in Massachusetts. Pioneering a new industry doesn’t come without challenges, but we’re laying the groundwork for long-term success. DOER’s adaptive RFP demonstrates our commitment to moving this industry forward. As we’ve seen with the Vineyard Wind project currently under construction, this can be done, and we’re working to create fertile ground to get more projects up and running.”
Avangrid will not — as some observers had hoped — be excluded from rebidding Commonwealth Wind in this fourth solicitation because it backed out of its previous commitments.
But 15 points in the 100-point evaluation process will be based on bidders’ past performance, with potential demerits for any delays, cancellations or terminations.
The solicitation will give bidders the option of indexed pricing, allowing for subsequent adjustments to reflect future inflation and other macroeconomic trends like those now bedeviling offshore wind developers.
