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Massachusetts wind power project ‘no longer viable’ without contract adjustments, says developer

CNBC|Emma Newburger|October 31, 2022
MassachusettsUSAOffshore WindEnergy Policy

The developer for a major offshore wind power project in Massachusetts has asked state regulators to pause review of the contract for one month, saying that global price hikes, inflation and supply chain shortages are disrupting the plan.


KEY POINTS
  • The developer for a major offshore wind project in Massachusetts has asked state regulators to pause review of the contract for one month, saying that global price hikes, inflation and supply chain shortages are disrupting the plan.
  • The Commonwealth Wind project, which would supply 1,200 megawatts of offshore wind power starting in 2028, “is no longer viable and would not be able to move forward” under the terms of contract, according to a motion recently filed by the developer.
  • The rising cost of the Massachusetts project comes as the U.S. aggressively ramps up its offshore wind industry. The Biden administration has set a target for permitting 30 gigawatts of offshore wind by 2030.
The developer for a major offshore wind power project in Massachusetts has asked state regulators to pause review of the contract for one month, saying that global price hikes, inflation and supply chain shortages are disrupting the plan.
 
The Commonwealth Wind project, which would supply 1,200 megawatts of offshore wind power starting in 2028, “is no longer viable and would not be able to move ... more [truncated due to possible copyright]
     
KEY POINTS
  • The developer for a major offshore wind project in Massachusetts has asked state regulators to pause review of the contract for one month, saying that global price hikes, inflation and supply chain shortages are disrupting the plan.
  • The Commonwealth Wind project, which would supply 1,200 megawatts of offshore wind power starting in 2028, “is no longer viable and would not be able to move forward” under the terms of contract, according to a motion recently filed by the developer.
  • The rising cost of the Massachusetts project comes as the U.S. aggressively ramps up its offshore wind industry. The Biden administration has set a target for permitting 30 gigawatts of offshore wind by 2030.
The developer for a major offshore wind power project in Massachusetts has asked state regulators to pause review of the contract for one month, saying that global price hikes, inflation and supply chain shortages are disrupting the plan.
 
The Commonwealth Wind project, which would supply 1,200 megawatts of offshore wind power starting in 2028, “is no longer viable and would not be able to move forward” without amendments to the power purchase agreement (PPA), according to a motion recently filed by the developer.
 
Attorneys for Commonwealth Wind in the motion cited global commodity price increases, in part because of the war in Ukraine, the sudden spike in interest rates, prolonged supply chain constraints and persistent inflation as reasons for the increased expected cost of construction.
 
“A one-month suspension would give the parties an opportunity to evaluate the current situation facing the project and potentially agree upon changes to the PPAs ... that could allow the project to return to viability,” they wrote.
 
The rising cost of the project comes as the U.S. aggressively ramps up its offshore wind industry. The Biden administration has set a target for permitting 30 gigawatts of offshore wind by 2030, enough to supply 10 million homes with clean energy while creating new domestic jobs.
 
The Bureau of Ocean Energy Management is also set to hold its first-ever offshore wind lease sale on the West Coast in December, and to date has held 10 lease sales and issued 27 active commercial wind leases in the Atlantic Ocean from Massachusetts to North Carolina.
 
The president’s Inflation Reduction Act passed earlier this year includes an federal tax provision that will support offshore wind. The provision provides a 30% tax credit for offshore wind projects that start construction before Jan. 1, 2026.
 
More offshore wind developers are expected to claim the tax credit as the costs of constructing their plans continue to rise.
 
Commonwealth Wind said a suspension would enable parties to consider possible approaches to restore the project’s viability, including the cost-saving measures and tax incentives under the Inflation Reduction Act.
 
Even with a brief pause, the developer said the project is expected to go live in 2028 and would help the state of Massachusetts reach its goal to slash greenhouse gas emissions in half by the end of the decade, the developer said.
 
“Commonwealth Wind remains fully committed to the project and to delivering cost-effective renewable energy from the project to the residents and businesses of Massachusetts in a manner that advances ... the Commonwealth’s energy and climate policies,” the attorneys wrote.

Content truncated due to possible copyright. Use source link for full article.


Source:https://www.cnbc.com/2022/10/…

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