Ørsted and Eversource Left Stranded in Rhode Island

Wind Farm Update

July 19, 2023, by Adnan Durakovic

Rhode Island Energy, the largest utility in Rhode Island, has decided that it will not be moving forward on a long-term power purchase agreement (PPA) with Ørsted and Eversource for the Revolution Wind 2 offshore wind farm.

The utility, formerly known as National Grid Rhode Island, said that higher interest rates, increased costs of capital and supply chain expenses, as well as the uncertainty of federal tax credits, all likely contributed to higher proposed contract costs. Those costs were ultimately deemed too expensive for customers to bear and did not align with existing offshore wind PPAs, the utility said.

”The economic development benefits included in the proposal were weighted and valued appropriately by our evaluation team, but ultimately it was determined those features did not outweigh the affordability concerns and other ACES standards,” said Dave Bonenberger, president of Rhode Island Energy.

Rhode Island Energy said that the decision was made following a four-month evaluation of the bid, which was completed in consultation with the Rhode Island Office of Energy Resources (OER) and the Division of Public Utilities and Carriers (Division). Rhode Island Energy said the proposal did not meet all the requirements as detailed in the Affordable Clean Energy Security (ACES) Act.

The utility said it will provide a comprehensive filing with the Rhode Island Public Utilities Commission detailing its decision in the next 60 days, detailing why the proposal did not meet the ACES Act requirement “to reduce energy costs” and other factors that scored low in the evaluation. OER and the Division will also file comments, and the bidders will also have an opportunity to respond to those findings.

Over the coming weeks, Rhode Island Energy said it will continue to work with OER, the Division, and stakeholders on additional ways to bring more offshore wind opportunities to the state that could offer more affordable pricing. In the meantime, the company said it began transmission line upgrades this spring to support Ørsted and Eversource’s original Revolution Wind project. A PPA for that project was signed in 2019, with the project expected to be operational in 2025.

Rhode Island Energy also has an agreement with Ørsted for the 30MW Block Island Wind Farm, the first operational offshore wind project in the USA.

”We recognize some will be disappointed that we didn’t choose to move forward on negotiating this PPA, but that doesn’t mean we are abandoning our commitment to offshore wind in Rhode Island,” Bonenberger said.

”In fact, we are already in discussions with state and regional leaders about new opportunities to bring more offshore wind to the state, which we hope to progress in the coming months.”

The joint proposal from Ørsted and Eversource for Revolution Wind 2 was the only bid received by Rhode Island Energy in response to its Request for Proposals (RFP) that was issued in October 2022.

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The RFP looked to solicit an additional 600 to 1,000 MW of offshore wind to help meet the state’s clean energy goals.

According to Ørsted and Eversource, the 884 Revolution Wind 2 wind farm represents more than USD 2 billion in direct economic benefits to Rhode Island, including the creation of hundreds of local jobs and “unprecedented investments” in port improvements and shipbuilding.

”We’re disappointed that Rhode Island Energy did not select Revolution Wind 2. This project would put Rhode Island’s 100-percent clean energy future in reach, delivering renewable energy to hundreds of thousands of homes and creating more than $2 billion in direct economic benefits to the state, with historic investments in local union jobs, workforce training, ports and the supply chain. We will assess our options for Revolution Wind 2,” a spokesperson for Ørsted said.