Gone with the wind? Tracking sunken U.S. offshore wind projects

(Photo Credit: steve docwra/Bigstock.com)

Many renewable energy sectors continued to grow in 2023, but it was a rough year for U.S. offshore wind.

Out with the old, in with the new, right? Not quite.

Just days into 2024, BP and Equinor announced the termination of Empire Wind 2, and that got us thinking- how many similar projects have met an equally untimely demise?

Below you’ll find a running list of U.S. offshore undertakings that have been sent to that big wind farm in the sky. Many of the projects are likely to be rebid to utilities and regulators with financial terms that reflect the macroeconomic pressures facing the industry, which is a nice way of saying “costing more.”

Common causes of cancellations include inflation and supply chain disruptions, caused in large part by the war in Ukraine. Developers often expressed openness to continuing projects under offtake agreements, but that sentiment seldom led to survival.

If you don’t see your favorite nixed wind project on the list, drop us a line and I’ll add it, with a hat tip to you.

Empire Wind 2 project terminated as Equinor and BP seek a reset

In early January 2024, Equinor and BP decided to terminate the Empire Wind 2 project, citing inflation, interest rates, and supply chain disruptions. The Northeastern U.S. offshore project promised a potential generative capacity of 1,260 MW.

The companies reached an agreement with the New York State Energy Research and Development Authority (NYSERDA) to terminate their Offshore Wind Renewable Energy Certificate (OREC) Agreement. They said this arrangement reflects changed economic circumstances on an industry-wide scale and repositions an “already mature” project to continue development under a new agreement.

The project was already on the chopping block after the New York State Public Service Commission denied petitions filed by a group of developers and a state renewable energy trade association seeking billions of dollars in additional funding from consumers for four proposed offshore wind projects and 86 land-based renewable projects.

In October 2023, developers who filed the petition, including subsidiaries of Orsted, Equinor, and BP, said that they were reviewing the Commission’s decision before reassessing their offshore projects, like Orsted’s 924-MW Sunrise Wind, Equinor/bp’s 816-MW Empire Wind 1, 1,260-MW Empire Wind 2 and 1,230-MW Beacon Wind.

Orsted scraps Ocean Wind I and II projects in New Jersey, citing supply chain issues

In November 2023, Danish energy developer Orsted said it was scrapping its Ocean Wind I and II projects in southern New Jersey, citing supply chain issues and rising interest rates.

The cancelation of the two large offshore wind power projects off the coast of New Jersey added uncertainty to a nascent industry the Biden administration and many state governments are counting on to help transition away from the burning of planet-warming fossil fuels.

Avangrid and Connecticut utilities cancel Park City Wind project PPA

In October 2023, Avangrid and Connecticut utilities agreed to terminate a long-term PPA for a Massachusetts offshore wind project citing economic conditions that left the project “unfinanceable,” according to the developer.

Avangrid plans to rebid the 804 MW Park City Wind project, which had previously secured 20-year PPAs with Eversource Energy and United Illuminating. United Illuminating is an Avangrid subsidiary.

Shell and Ocean Winds’ SouthCoast Wind agrees to pay $60M to scrap PPAs

In August 2023, The developer of SouthCoast Wind agreed to pay more than $60 million to three Rhode Island utilities after requesting to back out of its PPAs, Commonwealth Magazine reported.

The Energy Facility Siting Board (EFSB) previously ruled that the 1,200 MW SouthCoast Wind must present new PPAs for its application to proceed after original offtake agreements between the developer and Massachusetts utilities were scrapped.

Earlier that summer, SouthCoast Wind, a joint venture of Shell and Ocean Winds, told Rhode Island regulators that it planned to follow the lead of Commonwealth Wind and scrap agreements with utility companies. The developer concluded that its 800 MW project bid selected in 2019 and its 400 MW project bid selected in 2021 are no longer financially viable at previously negotiated prices, due to macroeconomic headwinds like inflation and higher interest rates, as well as supply chain constraints caused by the war in Ukraine, the company said in filings.

Rhode Island Energy pulls out of Revolution Wind 2 PPA

During the summer of 2023, Economic uncertainties resulted in multiple East Coast offshore wind PPAs coming to an end, with both developers and utilities deciding to back out of the agreements.

In July 2023, Rhode Island Energy pulled out of its PPA with Ørsted and Eversource for the offshore wind farm Revolution Wind 2, citing higher interest rates, increased expenses, and questionable federal tax credits, Offshore Wind reported. The decision was made after a four-month evaluation process, Rhode Island Energy said, and the utility ultimately concluded that the contract costs had become uneconomical.

Avangrid agrees to pay penalties for backing out of Commonwealth Wind

In Massachusetts, the developers of the offshore wind project were the ones to pull out.

In July 2023, The Iberdrola-owned Avangrid, the developer of the Commonwealth Wind offshore farm, Avangrid agreed to pay $48 million in penalties to the three utilities for backing out of the PPA, which had been under review since spring 2022, Commonwealth Magazine reported. The developer originally requested to terminate the PPA signed with Eversource Energy, National Grid, and Unitil in 2022. The utilities agreed to end the agreement, WWLP reported.

Avangrid cited economic conditions such as supply chain disruptions, inflation, rising interest rates, and cost increases for offshore wind equipment. The company said the project “cannot be financed and built under the current PPAs.”

The company said that while incentives for clean energy included in the Inflation Reduction Act (IRA) could also impact the project, though AVANGRID said that the IRA alone could not save Commonwealth Wind.

This article includes reporting from the Associated Press.