Avangrid has notified the Massachusetts Department of Public Utilities (DPU) that it decided to continue with the power purchase agreements (PPAs) for its Commonwealth Wind project that are currently undergoing review and approval proceedings. However, the developer has kept its position that under the conditions in the current PPAs the 1.2 GW project would not be economically viable.
While the company took the DPU’s option to resume under the current PPAs, it noted that the parties should be allowed to negotiate amendments to the PPA contracts that would allow the offshore wind project to be economically viable.
Avangrid notified the Massachusetts DPU of its decision on 14 November following to the state regulator’s order issued ten days earlier, in which the DPU denied the developer’s request for a one-month suspension of the PPA proceedings to renegotiate the agreements with the electric distribution companies (EDCs).
As the DPU asked the developer to either proceed with the current PPAs or move for a dismissal of the approval proceedings, Mayflower Wind – a joint venture between Shell and Ocean Winds which joined Avangrid’s case – withdrew its motion shortly after the DPU issued its order.
In their responses to the DPU, both Mayflower Wind and now Commonwealth Wind have retained the standpoint on the projects’ financeability and viability under the conditions of the current PPAs.
“For the reasons stated in Commonwealth Wind’s prior submissions, Commonwealth Wind strongly believes that it is in the public interest to allow the parties to negotiate PPA contract amendments that allow Commonwealth Wind’s offshore wind generation project to be economically viable, to obtain financing and to proceed to construction and, finally, to deliver Massachusetts customers cost-effective renewable energy at prices that would be lower than alternatives” , Commonwealth Wind states in its notice to the DPU.
In its prior submissions, Avangrid said that Commonwealth Wind would no longer be viable under the PPAs signed earlier this year due to sharp and sudden increases in interest rates, persistent inflation, and prolonged supply chain constraints, driven by the COVID-19 pandemic and the war in Ukraine.
“If the Department does not support a pause in these proceedings, as previously requested by Commonwealth Wind, then the appropriate action is for the Department to continue with this proceeding such that the parties can continue ongoing discussions to employ all opportunities, including contract improvements, to achieve a financeable and economically viable Project” , the developer told the DPU.