US offshore wind projects facing inflation headwinds – Reuters

U.S. President Joe Biden holds up a wind turbine size comparison chart while attending a meeting with governors, labor leaders, and private companies launching the Federal-State Offshore Wind Implementation Partnership, at the White House in Washington, U.S., June 23, 2022. REUTERS/Kevin Lamarque/File Photo Acquire Licensing Rights
Nov 1 (Reuters) – Soaring costs from rising inflation, interest rate hikes and supply chain delays cast doubts on U.S. President Joe Biden administration's plans to deploy 30,000 megawatts (MW) of offshore wind by 2030 to cut carbon dioxide emissions.
Some developers have cancelled power purchase contracts saying the previously agreed prices were too low to justify investments, but said they might re-bid in the future to continue the projects.
The following is a list of major U.S. offshore wind projects and their status:
Orsted canceled its plans to build the two projects with a combined capacity of 2,248 MW off the southern New Jersey coast on Nov. 1, citing costs and supply chain constraints, particularly a vessel delay on Ocean Wind 1 that considerably impacted project timing.
The first stage was expected to start production in 2026 and the second one in 2029.
The 800 megawatt (MW) project owned by Avangrid (AGR.N), a part of Spanish Iberdrola (IBE.MC), and Danish green energy investor Copenhagen Infrastructure Partners (CIP), is expected to start generating green power by the end of this year.
The project located 15 miles off the coast of Martha's Vineyard will be able to supply about 400,000 homes in New England when fully operational in 2024.
The 132 MW project located 35 miles east of Montauk Point in New York and owned by Denmark's Orsted and Eversource (ES.N) also aims to start production by the end of 2023, with all 12 expected turbines to be installed by the end of 2023 or early 2024.
The New York State regulator has also rejected Orsted's request to renegotiate terms of power sales from the 924-MW Sunrise Wind 1 project, which was previously expected to start in 2026.
Orsted said the state's plans for accelerated offshore wind solicitation, however, "could provide an opportunity to re-bid the project" it owns in 50/50 partnership with Eversource.
The company expected to pay about 3 billion Danish crowns for cancelling current power purchase agreements, but was not going to walk away from the project, its CEO has said.
Maryland's first offshore wind project is expected to start operations in 2025. The 270-MW project located more than 20 miles from shore is owned by US Wind, a subsidiary of Italy's Renexia SpA.
Orsted and its partner Eversource have made the final investment decision on the 704 MW project more than 15 miles south of the Rhode Island coast and 32 miles southeast of the Connecticut coast.
Its onshore construction has already started, with offshore part expected to start in 2024. When complete in 2025, it will deliver 400 MW of clean energy to Rhode Island and 304 MW to Connecticut, powering more than 350,000 homes in total.
In March, the Rhode Island utility rejected Orsted's proposal to build the project's second stage, 884-MW Revolution Wind 2, saying it would be too costly for consumers.
Construction of the 2,600-MW project located about 27 miles of the coast of Virginia Beach and owned by U.S. utility Dominion Energy (D.N) is expected to start in 2024 and to be completed in late 2026. Dominion built the first phase of the project – a two-turbine, 12-MW pilot – in 2020.
The 1,200-MW project, previously known as Mayflower Wind, 30 miles south of Martha's Vineyard and 20 miles south of Nantucket is on track to start production in 2027.
Its owners – Shell and Ocean Winds – agreed to pay about $60 million to local utilities in Massachusetts to get out of previously signed power sales contracts, but plan to rebid in the project in future offshore solicitations.
Ocean Winds is a joint venture of French ENGIE (ENGIE.PA) and a renewable arm of Portuguese energy group EDP (EDP.LS).
The fate of the 800-MW project off the coast of Massachusetts owned by Avangrid remains uncertain after the company agreed in October to pay $16 million to local utilities to terminate previously agreed power purchase agreements.
The company said it may re-bid the project, which was previously expected to start in 2027, pending the terms of future tenders that could reduce the investment risk.
Another Orsted-owned project for 120 MW and 846 MW of capacity set to be built in two stages 19 miles off the Delmarva Coast, is expected to start production in 2026.
The 808-MW project owned by US Wind and located more than 15 miles off the coast of Maryland is expected to start operations in 2026, producing enough clean energy to power more than 250,000 homes, according to the project's website.
The fate of the two, 816 MW and 1,260 MW projects south of Long Island owned by Equinor and BP, remains uncertain after the New York State's regulator has rejected the developers request to renegotiate power supply terms.
Equinor and BP have booked $300 million and $540 million in impairments respectively on their projects off New York, following the regulator's decision, but said they were looking into a possibility to re-bid.
Empire Wind 1 was expected to start production in 2026 and Empire Wind 2 a one year later, according to the state's energy agency NYSERDA.
Construction of the 1,510-MW project off the coast of New Jersey is expected to start in 2024 and to be completed in 2027, according to its developer Atlantic Shores, a joint venture of Shell (SHEL.L) and French EDF . The project will generate enough clean energy for more than 700,000 homes.
The fate of the 1,232-MW project off Massachusetts owned by Avangrid (AGR.N), a part of Spanish energy company Iberdrola (IBE.MC), remains unclear after Avangrid agreed in July to pay $48 million to local utilities to get out of previously signed power purchase agreements.
The company said it may re-bid the project, which was previously expected to start in 2027, pending the terms of the future tenders that could reduce the investment risk.
The fate of the 1,230-MW project located over 60 miles east of Montauk Point and owned by Equinor and BP also remains uncertain after the New York State's regulator has rejected the developers request to renegotiate power supply terms.
The project was expected to start operations in 2029, according to NYSERDA.
The project developed by TotalEnergies (TTEF.PA), Rise Light & Power and Corio Generation has a contract to sell 1,404 MW in New York, supplying enough electricity to more than 700,000 homes annually. The project is located 54 miles from New York's shore in the New York Bight plans to start operations by 2030.
The project developed by a joint venture between RWE (RWEG.DE) and National Grid (NG.L) has a contract to sell about 1,314 MW in New York, enough to supply more than 650,000 homes annually. The project is located 64 miles from New York's shore in the New York Bight plans to start operations by 2030.
The project developed by Vineyard Offshore of Denmark's Copenhagen Infrastructure Partners (CIP) also has a contract to sell 1,314 MW in New York. The project is located 23 miles from New York's shore in the New York Bight is expected to start operations in 2030.
($1 = 7.0757 Danish crowns)
Reporting by Nerijus Adomaitis, Nichola Groom and Scott DiSavino Editing by Marguerita Choy
Our Standards: The Thomson Reuters Trust Principles.
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