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Vineyard wind pushes IRS for subsidy extension on delayed offshore project

“Since the business case is being impacted by external delays, we are requesting an extension from the IRS for the originally planned ITCs of the project,” Torgerson told analysts. “We’re petitioning the IRS to get an extension of that ITC at the 24 percent level…through the 2022 timeframe.” The delay means Vineyard may be able to upgrade to longer rotor blades for its 9.5-megawatt MHI Vestas turbines, Torgerson said — jumping from a 164-meter rotor diameter up to 174 meters. Longer blades mean more electricity can be generated.

In the meantime, the offshore wind developer is using the delay to consider larger rotor blades and a reconfiguration of the project’s layout.

Vineyard Wind is in talks with U.S. tax officials about extending the federal Investment Tax Credit (ITC) for its delayed 800-megawatt offshore wind project south of Massachusetts.

Vineyard’s project, expected to be the first large-scale offshore wind farm built in U.S. waters, planned on securing its final permits this summer and wrapping up construction in two phases over 2021-2022 — kick-starting the American offshore market in the process.

Those plans hit a snag, however, when the federal government unexpectedly decided to conduct additional “cumulative impact” studies on the now-large pipeline of projects shaping up along the East Coast, estimated at around 25 gigawatts and growing.

Vineyard now expects the government to issue the findings of its additional studies in a so-called Supplemental Environmental Impact Statement in late 2019 or early 2020, said James Torgerson, CEO of Avangrid, which is one of two owners of Vineyard Wind alongside Copenhagen Infrastructure Partners.

A period of public comment will follow, before the Bureau of Ocean Energy Management... more [truncated due to possible copyright]  

In the meantime, the offshore wind developer is using the delay to consider larger rotor blades and a reconfiguration of the project’s layout.

Vineyard Wind is in talks with U.S. tax officials about extending the federal Investment Tax Credit (ITC) for its delayed 800-megawatt offshore wind project south of Massachusetts.

Vineyard’s project, expected to be the first large-scale offshore wind farm built in U.S. waters, planned on securing its final permits this summer and wrapping up construction in two phases over 2021-2022 — kick-starting the American offshore market in the process.

Those plans hit a snag, however, when the federal government unexpectedly decided to conduct additional “cumulative impact” studies on the now-large pipeline of projects shaping up along the East Coast, estimated at around 25 gigawatts and growing.

Vineyard now expects the government to issue the findings of its additional studies in a so-called Supplemental Environmental Impact Statement in late 2019 or early 2020, said James Torgerson, CEO of Avangrid, which is one of two owners of Vineyard Wind alongside Copenhagen Infrastructure Partners.

A period of public comment will follow, before the Bureau of Ocean Energy Management issues Vineyard’s final environmental impact statement and the project can proceed.

“Once the [supplemental EIS] is out there, we think that in a period of about a couple of months, BOEM should be able to issue the final environmental impact statement,” Alejandro de Hoz, head of Avangrid’s renewables unit, said on an earnings call this week.

“Everything relies on when BOEM is able to issue that draft environmental impact statement," said de Hoz, who recently took the top job at Avangrid Renewables from the departing Laura Beane. “So this is actually the most critical part of the process and the one that is less clear in terms of timing." 

A delay of six months or a year may not sound like much for an industry that's just getting started and expected to boom over the coming decades. But Vineyard’s aggressive winning bid for an offtake contract in Massachusetts last year was predicated on maximizing the fading ITC — with the first 400-megawatt phase to be completed in 2021 at the 24 percent ITC level, followed by the second phase in 2022 at the 18 percent ITC.

BOEM's delay makes that schedule all but impossible, and longer delays could mean even bigger challenges. While Vineyard’s shareholders have publicly affirmed their intention to build the delayed project, suppliers have acknowledged that could mean financial pain.

Silver lining?

This week Torgerson confirmed Vineyard is pushing the Internal Revenue Service to extend the 24 percent ITC to the first 400-megawatt phase even if it comes online later than planned. He also said the delay could hold a silver lining.

“Since the business case is being impacted by external delays, we are requesting an extension from the IRS for the originally planned ITCs of the project,” Torgerson told analysts. “We’re petitioning the IRS to get an extension of that ITC at the 24 percent level…through the 2022 timeframe.”

The delay means Vineyard may be able to upgrade to longer rotor blades for its 9.5-megawatt MHI Vestas turbines, Torgerson said — jumping from a 164-meter rotor diameter up to 174 meters. Longer blades mean more electricity can be generated.

The delay may also allow Vineyard to reconfigure the 84 turbines in its project to an east-west layout, from the currently planned northwest-southeast orientation, while adding a bit more distance between the machines. Fishing groups and some government agencies have reportedly pushed for those changes, but Vineyard had resisted because it would have meant delaying construction for additional design and engineering work.

The east-west layout “is what the fishermen want, and that seems to be where things may be heading,” Torgerson said. The additional distance between turbines means “there’s less of a wake effect…and it improves the capacity factor a little.”

Rarely has a single project held such colossal significance for a new industry. 

In addition to offering the first real incentive for the supply chain to begin considering localizing in the U.S., the surprisingly low price of Vineyard's contract with Massachusetts opened the door to numerous states following with their own aggressive offshore wind goals and procurement programs.

Industry figures say the outcome of BOEM's deliberations could have a big effect on a planned lease auction for additional zones near New York, likely to happen in 2020.

This week Shell and EDP Renewables won Massachusetts' second offshore wind tender, promising power at an even lower rate than Vineyard while apparently planning to qualify for the 12 percent ITC.

Avangrid's big shift toward solar

Avangrid is the third-largest owner of U.S. onshore wind capacity, but like many wind developers it is placing a bigger emphasis on solar these days — and, indeed, its pipeline of solar projects eclipsed onshore wind during the third quarter. 

Avangrid Renewables' solar pipeline grew by nearly 1 gigawatt during Q3 and now stands at 5.8 gigawatts, making it the largest technology share within the company's huge 16.5-gigawatt renewables pipeline.

In addition to its half stake in Vineyard Wind's two projects in New England, Avangrid is also the sole owner of an offshore wind development zone facing North Carolina, the southernmost such zone in U.S. waters.

Avangrid, a large utility group based in the Northeast, is majority owned by Spain's Iberdrola, the world's largest wind generator.

During the conference call, Torgerson declined to comment on a recent press report that Avangrid is in merger talks with PPL Corp., another U.S. utility group.


Source: https://www.greentechmedia....

NOV 1 2019
http://www.windaction.org/posts/50547-vineyard-wind-pushes-irs-for-subsidy-extension-on-delayed-offshore-project
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