The developer of SouthCoast Wind has agreed to pay more than $60 million to three Rhode Island utilities after requesting to back out of its power purchase agreements (PPAs), Commonwealth Magazine reports.
If the Department of Public Utilities approves SouthCoast Wind’s proposal, it would be the second offshore wind farm to successfully end its agreement with Eversource Energy, National Grid, and Unitil, following Commonwealth Wind’s $48 million termination.
Earlier this summer, SouthCoast Wind, a joint venture of Shell and Ocean Winds, told Rhode Island regulators that it planned to follow the lead of Commonwealth Wind and scrap agreements with utility companies. The developer concluded that its 800 MW project bid selected in 2019 and its 400 MW project bid selected in 2021 are no longer financially viable at previously negotiated prices, due to macroeconomic headwinds like inflation and higher interest rates, as well as supply chain constraints caused by the war in Ukraine, the company said in filings.
In August, the Rhode Island Energy Facility Siting Board ruled that the 1,200 MW SouthCoast Wind must present new power purchase agreements for its application to proceed after original offtake agreements between the developer and Massachusetts utilities were scrapped. Rebecca Ullman, SouthCoast Wind’s director of external affairs, said the EFSB decision “puts stress on the project timeline and investment profile of future projects in New England and elsewhere.”
The offshore wind industry has been grappling with uncertainties recently, with multiple power purchase agreements (PPAs) coming to an end, and developers and utilities backing out of projects. Rhode Island Energy recently pulled out of its PPA with Ørsted and Eversource for the Revolution Wind 2 offshore project, citing higher interest rates, increased expenses, and questionable federal tax credits, concluding that the project had become uneconomical. Avangrid requested to terminate the PPA signed with Eversource Energy, National Grid, and Uniti for the Commonwealth Wind offshore farm last year.