Wind Power

SouthCoast Wind wants to scrap contracts for 1.2GW of offshore wind
SouthCoast Wind wants to scrap contracts for 1.2GW of offshore wind
(Photo Credit: steve docwra/Bigstock.com)

The developer of a proposed offshore wind project said it wants to cancel its existing contracts and try to secure better financial terms to build 1,200 MW of capacity.

News reports said that SouthCoast Wind, a joint venture of Shell and Ocean Winds, told Rhode Island regulators that it plans 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.

“While SouthCoast has pursued, and is open to other solutions, and even after factoring in potential tax incentives; termination, and payment of a financial penalty for termination, has become the prudent commercial course to realize the Project due to material and unforeseen supply chain and financing cost increases affecting the whole offshore wind industry,” SouthCoast Wind CEO Francis Slingsby reportedly said in a statement.

He said the decision followed a “significant increase in projected capital expenditures and finance costs of our project.”

Commonwealth Wind earlier concluded that its own 1,200 MW project could not be financed and built under existing contract terms. It filed a motion with the Massachusetts Department of Public Utilities late in 2022 asking to scrap the power purchase agreements the developer and utility companies previously reached. Regulators rejected that proposal and sought to uphold the contracts. The matter is under appeal.

Both developers are betting that by launching a new bid in the next solicitation round this summer they can be selected again but this time with more favorable financial terms.

Through three rounds of bidding in 2017, 2019 and 2021 Massachusetts procured 3,200 MW of capacity for offshore wind power. Commonwealth Wind and SouthCoast Wind scrapping their contracts would cut that pipeline by three-quarters.