Shell-Ocean Winds JV seeks to pull gigascale project as US offshore pressure mounts
ReCharge News|Tim Ferry |Jun 6, 2023
The Shell-Ocean Winds joint venture (JV) behind Massachusetts’ 1.2GW SouthCoast Wind array will petition to withdraw the project due to declining economics and lack of financing. The JV joins fellow Massachusetts developer, Iberdrola-controlled Avangrid, in seeking to rebid a project into the state’s upcoming round 4 tender. Avangrid filed a petition with the state utility regulator, Department of Public Utilities (DPU) late last year to withdraw its 1.2GW Commonwealth Wind farm.
The Shell-Ocean Winds joint venture (JV) behind Massachusetts’ 1.2GW SouthCoast Wind array will petition to withdraw the project due to declining economics and lack of financing. The JV joins fellow Massachusetts developer, Iberdrola-controlled Avangrid, in seeking to rebid a project into the state’s upcoming round 4 tender. Avangrid filed a petition with the state utility regulator, Department of Public Utilities (DPU) late last year to withdraw its 1.2GW Commonwealth Wind farm.
The Shell-Ocean Winds joint venture (JV) behind Massachusetts’ 1.2GW SouthCoast Wind array will petition to withdraw the project due to declining economics and lack of financing.
The JV joins fellow Massachusetts developer, Iberdrola-controlled Avangrid, in seeking to rebid a project into the state’s upcoming round 4 tender. Avangrid filed a petition with the state utility regulator, Department of Public Utilities (DPU) late last year to withdraw its 1.2GW Commonwealth Wind farm.
“While SouthCoast has pursued, and is open to other solutions, and even after factoring in potential tax incentives; termination, and payment of a financial penalty for termination, has become the prudent commercial course to realise the Project due to material …
... more [truncated due to possible copyright]The Shell-Ocean Winds joint venture (JV) behind Massachusetts’ 1.2GW SouthCoast Wind array will petition to withdraw the project due to declining economics and lack of financing.
The JV joins fellow Massachusetts developer, Iberdrola-controlled Avangrid, in seeking to rebid a project into the state’s upcoming round 4 tender. Avangrid filed a petition with the state utility regulator, Department of Public Utilities (DPU) late last year to withdraw its 1.2GW Commonwealth Wind farm.
“While SouthCoast has pursued, and is open to other solutions, and even after factoring in potential tax incentives; termination, and payment of a financial penalty for termination, has become the prudent commercial course to realise the Project due to material and unforeseen supply chain and financing cost increases affecting the whole offshore wind industry,” said Francis Slingsby, SouthCoast CEO.
As a result, the developer said it has “recently initiated discussions with representatives of the Commonwealth of Massachusetts and the Massachusetts electric distribution companies to terminate our existing Power Purchase Agreements [PPAs].”
The developer said it intends to rebid the capacity won in two rounds into the state’s round 4 opened in May.
SouthCoast, previously named Mayflower Wind, set a record for lowest offer in Massachusetts’ round 2 tender in 2020 with an accepted bid of $77.76/MW for 804MW of capacity. Per state law at the time, this new low became the bid ceiling for the next round.
SouthCoast was awarded a further 405MW with a $75/MWh offer in the state's round 3 in 2021, while Avangrid’s Commonwealth Wind project was selected at $72/MWh.
In January, DPU approved amendments to the 2020 PPAs that cut SouthCoast's rate even further, to $70.26/MWh, the lowest price for American offshore wind.
The amendments were requested by the power buyers, the New England utilities Eversource, Unitil and National Grid, based on a contract clause that allows for a rate reduction if the project becomes legally eligible for investment tax credits (ITC) “in excess of 12%”.
The Inflation Reduction Act (IRA) passed by Congress last summer allows developers to claim a 30% ITC for offshore wind projects.