Massachusetts Offshore Wind in Big Financial Trouble

Massachusetts Offshore Wind in Big Financial Trouble
https://www.windtaskforce.org/profiles/blogs/massachusetts-offshore...

By Allen Brooks 

“With two of the three projects in financial trouble, Massachusetts will not meet its clean energy goals, and when they do, the power prices will be much higher than expected…. The energy chaos in the state is getting interesting with significant implications for the offshore wind business.”

Wind Owners Want More Money paid by Ratepayers and Taxpayers and Added to Government Debt

The ongoing saga of Commonwealth Wind’s future took another twist in late January when it filed with the Massachusetts Supreme Court a petition to set aside the order by the Massachusetts Department of Public Utilities (PUC) issued on December 30, 2022, approving the Power Purchase Agreement (PPA) prices negotiated with the three local utilities purchasing the electricity.

The challenging, worsening financial viability has endangered the future of the project.

More Money for Avangrid Owners

Avangrid, the developer of the Commonwealth Wind project, wishes to renegotiate the PPA prices, or to have them rejected by the PUC which would allow Avangrid to rebid the project’s electricity output in the next Massachusetts wind power solicitation, which is scheduled for this spring.

The saga started in the early fall when Avangrid told investors and analysts, it was going to request a “price adjustment” to its PPAs that would improve the project’s financial economics.

Avangrid officials sought to reopen negotiations over the price of its electricity, which would enable the project to be financed.

Management currently calls the wind farm “not financible” because “offshore the turnkey capital costs and electricity production cost likely will be much higher in 2023 and future years, than in 2020 and earlier years, due to:

1) increased inflation rates,

2) increased interest rates,

3) supply chain disruptions, which delay projects and increase costs,

4) increased energy prices, such as of oil, gas, coal, electricity, etc.,

5) increased materials prices, such as of tungsten, cobalt, lithium, copper, manganese, etc.,

6) increased labor rates

They negatively affected the economics of the Project to the point where the negotiated PPAs would no longer facilitate the financing of the Project due to the Project’s negative net present value.”, i.e., losing money, even after hugely increased subsidies by Biden’s inflationary deficit spending of several $TRILLION IN 2 years

Climatewire, a Shill for Wind Owners


Before Avangrid filed its petition, Climatewire authored an article about the risk to Massachusetts’ clean energy mandate from the travails of one company – Avangrid.

The company has won three of the five major clean energy projects awarded by the state since 2017.

The three projects include Mayflower Wind I, Commonwealth Wind, and New England Clean Energy Connect, a transmission line through Maine bringing hydropower from dams in Quebec that would supply 18% of Massachusetts power, which is over budget and years behind schedule.

NOTE: The CO2 of any imported electricity is charged to Canada, not to Massachusetts, per EPA/IPCC rules.

The transmission project is mired in legal battles, while Commonwealth Wind cannot be built because Avangrid cannot get the financing from bankers, etc., according to its recent filings.

Mayflower Wind 1 is currently under construction and should be completed by late this year, if legal challenges, regarding killing whales, killing fisheries, killing sea birds, and hundreds of highly visible strobe lights are not resolved.

The bigger issue is how these projects would impact the state’s clean energy goal, which, on a world scale, amounts to nothing regarding climate change, but surely would further enrich already rich people, and surely would further impoverish already poor people

Before thinking it through, the state’s naive RE minions, who never analyzed, designed or operated any energy systems, foolishly aimed to reduce its CO2 levels from around 64 million tons in 2020 to about 47 million tons by 2030, as if that puny reduction would “fight GW”.

NOTE: The world’s fossil fuel-related CO2 emissions were about 36,000 million tons in 2022, about 50% from China and India, which prefer burning more and more coal, and about 6,000 million ton from the U.S.

Avangrid, which claims itself to be one of the good old boys fighting GW, estimates its three projects would contribute a combined seven million tons in annual emissions reductions or about 40% of the reductions needed by Massachusetts.

With two of the three projects in trouble, Massachusetts will not meet its clean energy goals

If, by some magic, the projects were implemented, the power prices would be much higher than expected, even with Biden’s greatly increased subsidies.

Avangrid has Massachusetts over a barrel! Give us more money, or else!

.

Climatewire pointed out that the original clean energy law mandated, mostly for PR and fool-the-gullible-people purposes, that with each subsequent offshore wind solicitation, the negotiated prices had to be lower than those agreed to in the most recent solicitation.

This irrational, Goldilocks policy assumed, the downward trajectory of renewable energy prices, based on economics of scale, and totally unrealistic low inflation and low interest rates, would continue in the U.S. and Europe, year after year.

The inflationary chickens of the Biden-cabal’s over $2 TRILLION of fiscal mismanagement are coming home to roost, as sure as the sun rises.

.

Increasing Wind Costs, c/kWh

.

That downward trend has not only come to a screeching halt, but prices have likely backtracked by five years or more.

The policy has been changed in the recently amended legislation, otherwise there would be no future wind bidders.

That was the easy part regarding future projects, but the above three projects are already signed and sealed, but are not deliverable, by a long shot

.

The Climatewire article pointed out, the Commonwealth negotiations were much more aggressive regarding producing a low electricity prices, c/kWh, for the three projects.

Therefore, the “experts” at Climatewire are wondering, as if in lalaland, whether merely giving back the 0.5 c/kWh negotiators sliced off the prior price threshold, might be sufficient to resolve the standoff.
The appeasement of Avangrid Owners would increase the electricity costs of ratepayers and taxpayers even more.

.

However, in the real world, that “give back” would not be anywhere near what Avangrid Owners need to get financing.

They need at least a 3.0 to 3.5 c/kWh increase, on top of the about 8 c/kWh that was negotiated.

That cost does not include the additional costs charged to ratepayers and taxpayers of:

1) About $450 million for grid augmentation/expansion to accommodate the variable output of wind, as estimated by ISO-NE

2) Plus the cost of services of a large capacity, MW, of gas/oil-fueled power plants to counteract the ups and downs of wind output, on a minute-by-minute basis, 24/7/365

MAINE, WITH EXPERIMENTAL, VERY EXPENSIVE FLOATERS, WILL FACE THE SAME, OR WORSE, ISSUES, UNLESS THE AUGUSTA FOLKS THINK THEMSELVES FROM ANOTHER PLANET, LIKE ALICE IN WONDERLAND.

Avangrid Petition

Where does the Avangrid petition go?

Climatewire reading of the order, and the petition, leaves us wondering about the timeline of the original order.

The PUC asked, if Avangrid was going to appeal their rejection of the company’s request to delay the PPA review.

The company said no, but then filed a challenge 32 days later.

Avangrid is claiming in its petition, the PUC did not accept additional Avangrid data pertinent to the matter before issuing its order.

But the company said it was not going to appeal, at which point the PUC closed the file and began deliberation before rendering its order.

Setting Precedents

The bigger problem facing the court, other than judging the facts, is the precedent a ruling in favor of Avangrid would set for other offshore wind projects and their developers.

It could unleash a rush of Owners ALL OVER THE US, wanting to renegotiate their PPAs to get higher prices.

The energy chaos in Massachusetts is getting interesting with significant implications for the offshore wind business.


Will Maine AND THE REST OF THE US be next?

DEEP-WATER FLOATING OFFSHORE WIND TURBINES IN MAINE

http://www.windtaskforce.org/profiles/blogs/deep-water-floating-off...

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Comment by Willem Post on April 16, 2023 at 12:52pm

Dan,

GO WOKE, GO BROKE

Comment by Dan McKay on April 8, 2023 at 6:15am

If regulators hold the line and the windies retreat, the price of Renewable Energy Credits(REC) will rise due to demand from engraved RE goals which will match or exceed the proposed inflated wind production costs. 

This whole thing is about money and nothing else

Chasing Carbon Zero is Futile

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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We have the facts on our side. We have the truth on our side. All we need now is YOU.

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

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