{"id":251597,"date":"2023-04-07T10:00:34","date_gmt":"2023-04-07T08:00:34","guid":{"rendered":"https:\/\/climatescience.press\/?p=251597"},"modified":"2023-04-07T10:00:37","modified_gmt":"2023-04-07T08:00:37","slug":"massachusetts-offshore-wind-troubles-2","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=251597","title":{"rendered":"Massachusetts Offshore Wind Troubles"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

From Master<\/strong>Resource<\/a><\/p>\n\n\n\n

By\u00a0Allen Brooks<\/a>\u00a0<\/p>\n\n\n\n

\n

\u201cWith two of the three projects in trouble, Massachusetts will not meet its clean energy goals, and when they do, the power prices will be higher than expected\u2026. The energy chaos in the state is getting interesting with significant implications for the offshore wind business.\u201d<\/p>\n<\/blockquote>\n\n\n\n

The ongoing saga of Commonwealth Wind\u2019s future took another twist in late January when it filed with the Massachusetts Supreme Court a petition to set aside the order by the Massachusetts Department of Public Utilities (PUC) issued on December 30, 2022, approving the Power Purchase Agreement (PPA) prices negotiated with the three local utilities purchasing the electricity.<\/p>\n\n\n\n

The challenging, worsening economics have upset the future of the project. Avangrid, the developer of the Commonwealth Wind project, wishes to renegotiate the PPA prices or to have them rejected by the PUC which would then allow Avangrid to rebid the project\u2019s output in the next Massachusetts wind power solicitation scheduled for this spring.<\/p>\n\n\n\n

The saga commenced in the early fall when Avangrid told investors and analysts that it was going to request a \u201cprice adjustment\u201d to its PPAs that would improve the project\u2019s economics. Avangrid officials sought to reopen negotiations over the price of its electricity, which would enable the project to be financed.<\/p>\n\n\n\n

Management currently calls the wind farm \u201cunfinanceable\u201d because \u201cunexpectedly high and persistent inflation, supply shortage and increases in supply costs, the Russian invasion of Ukraine, and rapid increases in interest rates had negatively affected the economics of the Project to the point where the PPAs would no longer facilitate the financing of the Project due to the Project\u2019s negative net present value.\u201d<\/p>\n\n\n\n

Before Avangrid filed of its petition, Climatewire<\/em> authored an article about the risk to Massachusetts\u2019 clean energy mandate from the travails of one company \u2013 Avangrid. The company has won three of the five major clean energy projects awarded by the state since 2017. The three projects include Mayflower Wind I, Commonwealth Wind, and New England Clean Energy Connect, a transmission line through Maine bringing hydropower from dams in Quebec that would supply 18% of Massachusetts power. The transmission project is mired down in legal battles, while Commonwealth Wind cannot be built because Avangrid cannot raise the money needed, according to its recent filings.<\/p>\n\n\n\n

Mayflower Wind is currently under construction and should be completed by late this year. The bigger issue is how these projects would impact the state\u2019s clean energy goal. The state needs to reduce its CO2 levels from around 64 million tons in 2020 to about 47 million tons by 2030. Avangrid estimates its three projects would contribute a combined seven million tons in annual emissions reductions or about 40% of the reductions needed by Massachusetts.<\/p>\n\n\n\n

With two of the three projects in trouble, Massachusetts will not meet its clean energy goals, and when they do, the power prices will be higher than expected.<\/p>\n\n\n\n

Climatewire\u00a0<\/em>pointed out that the original clean energy law mandated that, at each offshore wind solicitation, the prices negotiated needed to be lower than those agreed to in the most recent solicitation. This irrational policy assumed that the downward trajectory of renewable energy prices would continue.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Rising Wind Costs<\/strong><\/p>\n\n\n\n

That downward trend has not only stopped but prices have likely backtracked by five years or more. The policy has been changed in the recently amended legislation. The article pointed out that the Commonwealth Wind price was much more aggressive in producing a lower power price. Therefore, the magazine wonders whether merely giving Avangrid back the $5 per megawatt price they undercut the prior price threshold might be sufficient to resolve the standoff.<\/p>\n\n\n\n

Where does the Avangrid petition go? Our reading of the order and the petition leaves us wondering about the timeline of the original order. The PUC asked if Avangrid was going to appeal their rejection of the company\u2019s request to delay the PPA review.<\/p>\n\n\n\n

The company said no\u2013but then filed a challenge 32 days later. Avangrid is claiming in its petition that the PUC did not accept additional Avangrid data pertinent to the matter before issuing its order. But the company said it was not going to appeal, at which point the PUC closed the file and began deliberation before rendering its order.<\/p>\n\n\n\n

The bigger problem facing the court, other than judging the facts, is the precedent a ruling in favor of Avangrid would set for other offshore wind projects and their developers. It could unleash a rush of developers wanting to renegotiate their PPAs to get higher prices. The energy chaos in Massachusetts is getting interesting with significant implications for the offshore wind business.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cWith two of the three projects in trouble, Massachusetts will not meet its clean energy goals, and when they do, the power prices will be higher than expected\u2026. The energy chaos in the state is getting interesting with significant implications for the offshore wind business.\u201d<\/p>\n","protected":false},"author":121246920,"featured_media":251599,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[691818096,691818097,691818098],"class_list":{"0":"post-251597","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-uncategorized","8":"tag-massachusetts-offshore","9":"tag-massachusetts-clean-energy","10":"tag-rising-wind-costs","12":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2023\/04\/00offshore-wind-2.jpg?fit=1024%2C628&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paxLW1-13s1","jetpack-related-posts":[{"id":251209,"url":"https:\/\/climatescience.press\/?p=251209","url_meta":{"origin":251597,"position":0},"title":"Massachusetts Offshore Wind Troubles","author":"uwe.roland.gross","date":"05\/04\/2023","format":false,"excerpt":"\u201cWith two of the three projects in trouble, Massachusetts will not meet its clean energy goals, and when they do, the power prices will be higher than expected\u2026. 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