As CT scrambles to save wind, developers step up off Jersey Shore

As Avangrid and Orsted waffle on wind farms off the southern New England coast amid runaway costs, two more big developers are pushing ahead undeterred for a big installation off New Jersey — presumably at a price point that could raise the bar on what Connecticut and other states will have to pay to get the wheels turning on wind power.

Attentive Energy announced it would bid on a power purchase agreement from New Jersey for a new proposed wind farm, the same day Avangrid announced it would back out of Park City Wind. The project was second in the pipeline to generate carbon-free electricity for Connecticut from offshore winds, after Orsted's Revolution Wind.

A subsidiary of France-based TotalEnergies, Attentive Energy is pairing with the Corio Generation affiliate of Macquarie Group based in Australia.  New Jersey kept the window open for bids from March through August, coinciding with a stretch in which some offshore wind developers elected to cut their losses amid high interest rates that are making it more expensive to finance projects with loans, and continuing problems with the array of suppliers needed for the projects.

After Orsted balked at moving ahead with its Ocean Wind 1 project off New Jersey, the state passed a law letting Orsted pocket federal tax credit benefits rather than passing them onto utility customers as specified in the original Ocean Wind 1 agreement.

Orsted is currently staging massive wind turbine components on State Pier in New London for its South Fork Wind off Block Island, which when completed will generate electricity for the New York grid. In late August, Orsted's CEO told investment analysts the company plans to push ahead with Revolution Wind as well, but an executive said Wednesday the company has yet to make a final investment decision, during a press conference by Gov. Ned Lamont at State Pier.

Lamont declared Revolution Wind "a reality" on Wednesday, while making clear that could be dependent on the Biden administration acceding to a request by Lamont and other governors to earmark more investments under the Inflation Reduction Act to support offshore wind. Asked by CT Insider on a timeline he hopes to get a response from the White House, "tomorrow" was Lamont's response.

"We've got some challenges there, some of it related to supply chain, some of it related to interest rates," Lamont said. "You take that into account, but you have to have a core belief — you think wind is going to be a key piece of our state's future, our region's future and our country's future, when it comes to carbon-free power that you can really count on at a reasonable price."

But whereas Avangrid and Orsted are now balking at the price of future wind farms against projected revenues, Attentive is pushing ahead based on its understanding of New Jersey's parameters. Lamont's energy and environment chief told CT Insider the state is monitoring the developments in New Jersey, but offered no insights as to why the Garden State successfully drew a bid even as Avangrid was pulling the plug on Park City Wind except to note the industry's inflationary trends.

In the U.S. Department of Energy's most recent schedule of projected revenues for wind farms under development, the South Fork Wind Farm now being staged in New London is the most lucrative of any on the books, at 15.9 cents a kilowatt hour with adjustments for inflation. That is 40 percent more than what Orsted would make for Revolution Wind as calculated by DOE under power purchase agreements with Rhode Island and Connecticut, and nearly 90 percent more than what Avangrid would have garnered under its Park City Wind power purchase agreement.

Connecticut is no longer going it alone, instead teaming with Massachusetts and Rhode Island as it seeks a fresh set of bidders who might see economics of scale. In a departure from the power purchase contracts offered Avangrid and Orsted, the three states will have include a mechanism that index electricity revenue to installation costs, with the goal of removing inflation as a disincentive. But that could increase the cost of wind power for rate payers in the three states, if the index triggers any contract escalators.

Combined, Massachusetts, Connecticut and Rhode Island still come up short of New Jersey's current target of 11.5 gigawatts of wind capacity in the planning stages, forcing the three states to compete for the attention of developers as the case with New York.

"No one anticipated a pandemic, a war in Ukraine and these other factors that would affect the price of delivering projects that would have very long lead times," said Katie Dykes, commissioner of the Connecticut Department of Energy and Environmental Protection. "We're thinking about ways we can update that model to provide for more flexibility as appropriate."

The state's new stance comes too late to keep Avangrid locked into Park City Wind, though the Orange-based Iberdrola subsidiary could bid anew in January with much of the preparatory work already complete, potentially giving it a leg up on competitors.

In a Wednesday statement, Avangrid CEO Pedro Azagra was quoted saying the company looks forward "to reviewing the final details of the procurement structure", without making any commitment for additional wind capacity beyond the Vineyard Wind farm now under construction near the South Fork Wind, Revolution Wind and Park City Wind lease areas.

A "roadmap" for wind farm development released by the state on Wednesday made no mention of Avangrid's decision to scotch Park City Wind, nor Eversource's stated intention to divest its equity interests in Revolution Wind as an original co-investor alongside Orsted.

The Attentive Energy Two wind farm has been in the works since 2018, but Attentive Energy secured the lease rights only in February 2022. With wind farms now facing massive cost increases due to interest rates needed to finance them and suppliers struggling with higher costs for materials and labor, Attentive Energy is pushing ahead despite other projects being curtailed off the New England coast and globally.

Turbine foundations and components for the Attentive Energy Two project will be staged at the New Jersey Wind Port in Paulsboro, N.J., located on the Delaware River opposite Philadelphia International Airport. Orsted is using New London's State Pier for the South Fork Wind Farm it is about to start building off Rhode Island to supply electricity to New York, with plans then to pivot State Pier to become the staging area for Revolution Wind if Orsted proceeds with construction.

Avangrid is staging Vineyard Wind farm from New Bedford, Mass., and had been planning to build a second yard in Bridgeport for the proposed Park City Wind project it has now tabled, supported by a $10.5 million U.S. Department of Transportation grant for harbor dredging.

Plans are in the works for other wind farm staging ports at Staten Island in New York City, Salem, Mass., and Portsmouth, Va.