Despite Price Concerns, Avangrid Keeps Commonwealth Wind in Play
The Commonwealth Wind project off the coast of Massachusetts remains in play after its developer agreed to move forward with state review of its existing contracts. Avangrid, the Spanish utility company behind the project, had previously asked for a pause to renegotiate rates and had described the current financial structure as "no longer viable."
The state of Massachusetts selected Commonwealth Wind as a green electricity supplier last year. At the time, Commonwealth contracted to sell power at $72 per MWh, but economic conditions have fundamentally changed since then. Prices for steel, copper cable and turbines have all increased substantially, impacting the cost of construction for offshore wind farms. In a filing in late October with the state's Department of Public Utilities (DPU), developer Avangrid claimed that the project was "no longer viable" without revising power purchase agreements (PPAs) to raise prices. It asked for a delay in the state's contract approval process so that it could renegotiate rates - but the DPU was not receptive. With a firm rebuke, the agency gave Avangrid until November 14 to decide whether to accept the rates it had agreed to or back out of the agreement.
Late Monday, Avangrid agreed to continue with state contract approval proceedings, though it did not change its claim that the pricing needs to be revisited. "[Commonwealth Wind] strongly believes that it is in the public interest to allow the parties to negotiate PPA
contract amendments that allow [the project] to be economically viable, to obtain financing and to proceed to construction," the firm said in the filing.
The development is good news for Massachusetts' green energy plans. Commonwealth Wind has not discussed how large any possible price increase might have to be in order to move forward, but Avangrid has suggested that "modest" changes would be enough.
"Avangrid believes there is a path forward for this project," Senior Vice President Sy Oytan told Reuters in a statement.