THE DEVELOPER of SouthCoast Wind on Tuesday agreed to pay more than $60 million to the state’s three leading utilities to terminate power purchase agreements the company negotiated last year to build its wind farm south of Martha’s Vineyard.
The SouthCoast proposal, if it is approved by the Department of Public Utilities, would be the second wind farm to terminate its contract with the utilities. Avangrid, the developer of Commonwealth Wind, successfully terminated its contract earlier this month by pledging a $48 million termination payment.
Both offshore wind farm developers say the original terms of the contracts are no longer viable because of inflation, rising interest rates, supply chain disruptions, and the war in Ukraine.
‘Seller has requested that the agreement and the voluntary commitment agreement be terminated because the facility is no longer economically financeable,” the SouthCoast Wind termination proposal states.
The overall agreement sets out three payments to each utility that, combined, total $60,420,000. Eversource receives a total of $32,452,570, National Grid receives $27,376,430, and Unitil $591,000. The utilities are required to rebate the money to customers on their bills.
The numbers are the same ones that have been bandied about by people in the know for months. SouthCoast Wind is paying more than Commonwealth Wind because it is terminating three contracts covering two procurements, while Commonwealth was dealing with only one procurement. The payments are based on the security deposits required under the agreements. SouthCoast Wind is being developed by Shell New Energies and Ocean Winds North America.
Both Commonwealth Wind and SouthCoast Wind are hoping to rebid their projects in a Massachusetts offshore wind procurement scheduled for next year. The arrangement has stirred some controversy about whether it is fair for a project far along in the approval process to be allowed to terminate its project and then bid against companies that are just launching their initiatives.