SouthCoast Wind pulling out of its wind farm deal
Seeks to terminate its contracts, rebid in next round
A clarification has been added to this story.
SOUTHCOAST WIND said on Monday that it is moving to terminate its existing offshore wind contracts with Massachusetts and hoping to rebid them at higher prices in the state’s next procurement.
The announcement ended months of vacillation by SouthCoast. The company, a joint venture of Shell New Energies and Ocean Winds North America, had repeatedly said the power purchase agreements it signed last year with Massachusetts utilities had been overtaken by inflation, rising interest rates, supply chain problems, and the war in Ukraine. Yet SouthCoast refused to concede that the contracts needed to be scrapped.
Sen. Michael Rodrigues of Westport, who had urged the Healey administration to not award future power purchase agreements to any company that reneged on an earlier deal, said SouthCoast had told him it intended to honor its contract.
The SouthCoast announcement means the second and third Massachusetts offshore wind procurements are a bust, with 2,400 megawatts of wind power scrapped. SouthCoast accounted for 1,200 megawatts and Commonwealth Wind for another 1,200 megawatts. Commonwealth, a wind farm proposed by Avangrid, early on said the contract it signed last year failed to provide enough money to finance the project.
Both companies are now trying to negotiate a way out of the contracts with the three Massachusetts utilities. They both plan to rebid the projects, perhaps with some additional capacity, in the state’s next procurement.
Maria Hardiman, a spokeswoman for the Executive Office of Environmental Affairs, encouraged a quick resolution of the dispute. “We encourage all parties to find clarity on the next steps before the fourth offshore wind solicitation becomes active,” she said in a statement.
Francis Slingsby, in a press release issued by SouthCoast, said the company has accepted that it will have to pay a financial penalty for terminating its earlier contracts. It is also likely to suffer some sort of bidding penalty in the next procurement. [CLARIFICATION: An earlier version of this story said Slingsby expected a bidding penalty in the next procurement. He did not say that, but the draft RFP suggests that will be the case.]But Slingsby, like Commonwealth Wind earlier, said the project remains an important part of the Massachusetts energy future. “We expect to have our federal permit in hand at the end of this year. In addition, our project will help meet state, regional and national climate goals, which at present are in jeopardy of falling short of target,” Slingsby said. “We are grateful to the Healey/Driscoll Administration for creating room for a rebid in the newly released draft RFP and look forward to being a valuable contributor to Massachusetts’s, Rhode Island’s, and all New England’s clean energy industry for decades to come.”
The only wind farm project currently moving forward in Massachusetts is the 800-megawatt Vineyardn Wind, which is expected to start producing some power by the end of this year.