By Robert Bradley Jr. — November 2, 2022
“… world commodity worth will increase … sharp and sudden will increase in rates of interest, extended provide chain constraints, and chronic inflation have considerably elevated the anticipated value of developing the venture.”
Electrical energy charges are going up due to wind, photo voltaic, and batteries being pressured upon, and duplicating, the grid. Reliability goes down due to wind and photo voltaic intermittency. And better rates of interest are (additional) ruining the economics of the infrastructure-heavy, up-front capital vital to show “free” wind and photo voltaic into electrical energy.
It’s an ideal storm which may simply overcome the taxpayer largesse of the federal subsidies (DOE and IRS) and charge averaging for captive ratepayers. With offshore wind experimental and extra-uneconomic, the worst will be assumed.
An October 30, 2020, article by Colin Younger, “Main Massachusetts offshore wind venture now not viable,” explains the fluid state of affairs.
A significant offshore wind venture within the Massachusetts pipeline “is now not viable and wouldn’t be capable to transfer ahead” beneath the phrases of contracts filed in Might. Each builders behind the state’s subsequent two offshore wind initiatives are asking state regulators to pause evaluate of the contracts for one month amid worth will increase, provide shortages and rate of interest hikes….
A one-month freeze, the developer stated, “would give the events a chance to judge the present state of affairs going through the venture and doubtlessly agree upon adjustments to the PPAs, together with different measures, that would permit the venture to return to viability.”
“As has been publicly reported in current weeks, world commodity worth will increase, partly attributable to ongoing conflict in Ukraine, sharp and sudden will increase in rates of interest, extended provide chain constraints, and chronic inflation have considerably elevated the anticipated value of developing the venture. In consequence, the venture is now not viable and wouldn’t be capable to transfer ahead absent amendments to the PPAs,” attorneys for Commonwealth Wind wrote in their movement.
The developer’s temporary highlights “value saving measures, tax incentives beneath the newly enacted Inflation Discount Act, a rise within the PPA costs, and enhancements to Venture efficiencies” because the attainable approaches to restoring their venture to viability. The developer additionally stated that it “stays absolutely dedicated to the venture and to delivering cost-effective renewable vitality from the venture to the residents and companies of Massachusetts in a fashion that advances the needs of [the state’s clean energy law] and the Commonwealth’s vitality and local weather insurance policies.”
The Boston Globe reported final month {that a} high Avangrid government instructed buyers that the corporate anticipated Commonwealth Wind and Park Metropolis Wind (a venture supposed to supply energy to Connecticut) to every be delayed by a yr as they sought contract revisions. CEO Pedro Azagra stated Commonwealth Wind is now anticipated to go reside in 2028, the Globe reported….
Commonwealth Wind stated that “the IRA advantages to the venture are usually not absolutely identified presently and never anticipated to make the venture financial absent different adjustments to the PPAs,” however instructed DPU that it “believes there could also be potential alternatives to share advantages related to the IRA with ratepayers and can be prepared to discover these alternatives with stakeholders.”
It’s unclear when a DPU determination will come, however the company had beforehand set a Tuesday deadline for briefs associated to the newest offshore wind contract….
Remaining Remark
The above article comes from the New Bedford Light, not the New York Instances. But when the deadlock continues with out extra subsidies from Massachusetts authorities or captive ratepayers, it’s going to deserve nationwide consideration.
One can solely hope that native ratepayers reject related charge hikes and protect their shorelines on the identical time. And will Commonwealth Wind’s issues function a warning that not solely nuclear (Plant Vogtle) but in addition offshore wind is topic to important threat to its builders.
