The Shell-Ocean Winds joint venture has withdrawn its motion to suspend the proceedings to approve the long-term power purchase agreements (PPAs) for its 405 MW Mayflower Wind project, filed with the Massachusetts Department of Public Utilities (DPU) after Avangrid requested a one-month suspension of the DPU’s review of the PPAs for its Commonwealth Wind development.
Avangrid, the US subsidiary of the Spanish renewable energy developer Iberdrola, submitted its motion for the 1,232 MW Commonwealth Wind offshore wind farm on 20 October, saying the project was no longer viable under the current PPAs and would thus not be able to move forward.
The developer attributes this to sharp and sudden increases in interest rates, persistent inflation, and prolonged supply chain constraints, driven by the COVID-19 pandemic and the war in Ukraine.
A week after Avangrid filed its motion for suspension of the PPA review, Mayflower Wind – a joint venture between Shell and Ocean Winds – joined the case.
The developers signed power offtake agreements in April with three Electric Distribution Companies (EDCs) in Massachusetts: Eversource Energy, National Grid, and Unitil.
In May, the EDCs submitted petitions for the Massachusetts DPU to start with the PPA review and approval proceedings.
Motions ‘Futile’ as Electric Distribution Companies Do Not Intend to Renegotiate PPAs
In its order on 4 November, the Massachusetts DPU rejected the motions by Commonwealth Wind and Mayflower Wind and said that the three EDC companies with which the developers signed PPAs had indicated that they did not intend to renegotiate the PPAs .
According to the DPU, for the utility companies the PPAs were a result of a robust competitive solicitation and were negotiated in good faith. “Accordingly, the Department finds that the need for a stay in the proceedings to allow for a renegotiation is doubtful” , the DPU states.
Still, the state regulator provided the reason behind its decision on the motions themselves, regardless of the already familiar position of the EDCs on renegotiation of the agreements.
Namely, according to the DPU, the motions’ aim of avoiding delays by allowing the extension of the procedural deadline would not be achieved even in the case the developers were willing to renegotiate PPAs, since the parties to the PPAs would be starting the process from the beginning.
This would still result in a delay and would not be more efficient than the EDCs withdrawing their petitions for PPA approval and renegotiating the agreements, according to the DPU.
The DPU also commented on Avangrid’s assertion that Commonwealth Wind is no longer viable under the current PPAs due to the current global crises and the increases in prices for global commodities.
The state regulator argues that the company was aware of this for a month and that it did not disclose these findings until it filed its motion, even though it notified investors on 22 September that the project completion had been postponed until 2028 and that PPAs would be renegotiated.
For this reason, the DPU has also denied the motion to reopen the evidentiary record as this, in accordance with the Department’s Procedural Rule on reopening hearings, requires showing of good cause, and the DPU determined there is none.
Mayflower Wind Withdraws with a Disclaimer; Avangrid’s Decision Yet to Come In
The Massachusetts Department of Public Utilities has also requested that the developers either continue with the projects under the current PPAs, or back out of them.
“[Commonwealth Wind] and Mayflower Wind must now decide whether they intend to move forward with their contractual obligations under the PPAs or file a request to dismiss the proceedings,” the DPU states in the Order.
The DPU gave Avangrid and the Shell-Ocean Winds JV until 9 November to notify the Department and the three utilities of their decision.
On 7 November, Mayflower Wind filed a letter withdrawing its motion for a one-month suspension of the PPA approval proceedings.
In the letter, the developer retains its position on the “significant changes in global supply and macroeconomics” that are affecting the project and says that Mayflower Wind will provide the electric distribution companies and the DPU with “detailed third-party analysis demonstrating challenges to financeability, with the goal of finding solutions that provide value to the rate payers” .
Avangrid is yet to file its decision with the DPU.
The two offshore wind farms by Avangrid and the Mayflower Wind joint venture – the 1,200 MW Commonwealth Wind and the 405 MW Mayflower Wind – were chosen in Massachusetts’s procurement last year and signed PPAs for USD 72/MWh and USD 76.7/MWh , respectively, this April.
Shell and Ocean Winds are developing two projects in the Mayflower Wind lease area. The PPAs for the first, 804 MW Mayflower Wind project were approved by the DPU in November 2020 after the offshore wind farm was selected by the state in the offshore wind solicitation in 2019.
Earlier this year, the Mayflower Wind joint venture announced that it had merged the two Mayflower Wind projects into one development now known as the SouthCoast Project.