Four-year delay for SouthCoast Wind offshore wind farm floated. What we know.
Ocean Winds, a joint venture between Portugal's EDP Renewables and France's ENGIE, confirmed to The Providence Journal Thursday, Feb. 28, that it was writing down the value of the project by €267 million, or about $278 million, to account for the lost revenues that would result from delaying power production by four years.
The company said that it's accounting for the possible delay, which would push the project's operation date back from 2030 to 2034, because of uncertainties caused by the executive order signed last month by President Trump that aims to curtail offshore wind development in America by stopping new leases to ocean waters and reviewing permits for projects already underway.
The company described the write-down as 'a precautionary measure based on scenarios of potential delays in its projects.'
'Ocean Winds strongly believes in the potential of offshore wind to generate significant economic activity and provide abundant, domestic energy to meet rapidly growing demand in the U.S. and remains confident in finding a path forward in coordination with all relevant authorities in the upcoming months,' the company said in a statement.
Ocean Winds is currently negotiating contracts with utilities in Massachusetts and Rhode Island for the sale of power from SouthCoast Wind.
Under a multi-state solicitation for offshore wind proposals, Massachusetts agreed to buy 1,078 megawatts of capacity from the project while Rhode Island committed to the purchase of 200 megawatts.
The contracts were set to be agreed to by Jan. 15, but the deadline was postponed to March 31.
While President Trump has vowed to stop offshore wind development, support for the industry among policymakers in Rhode Island and Massachusetts remains strong and work has continued on projects off southern New England.
They include Revolution Wind, the 65-turbine array, that would deliver 400 megawatts of capacity to Rhode Island and another 304 to Connecticut. Many of the project's turbines have already been installed.
SouthCoast Wind, while not yet under construction, has secured a lease to 199 square miles of federal waters 20 miles south of Nantucket and in the final weeks of the Biden administration won a key federal approval from the Bureau of Ocean Energy Management.
The project could cost as much as $5 billion and generate up to 2,400 megawatts of capacity, enough to power more than 1 million homes. Construction would start next year if there are no delays.
But the full ramifications are still unclear of Trump's crackdown on clean energy, which has also included a separate executive order that cuts off funding for solar power, electric vehicle charging and other projects aimed at reducing planet-warming greenhouse gases.
In a call with investors on Wednesday, Miguel Stilwell d'Andrade, chief executive officer of EDP Renewables, referred to the uncertainty, describing what has been 'a turbulent few months.'
When asked about SouthCoast Wind, he said the €133 million, or $138 million, impairment specific to his company, which was first reported by E&E News, is 'relatively prudent, because it's assuming there is a four-year delay' to the start of construction. He described that as 'the worst-case scenario.'
He continued, 'Obviously, given everything that's come out in the last couple of weeks with the executive orders, and asking to review the federal permits, we've decided to just be more prudent around the timing.'
He said the power purchase agreements for the project are ready to sign and described the pricing as 'attractive' relative to other recent contracts that had prices of about 15 cents per kilowatt hour.
Offshore wind in Cape Cod waters: Vineyard Offshore cuts 50 jobs amid 'market uncertainty.' What it means for Vineyard Wind.
One specific way that the company is trying to protect itself is by negotiating provisions in the contracts that factor in possible changes to an important tax credit that was funded by the Inflation Reduction Act, according to Stilwell d'Andrade and other EDP executives. As it stands, developers can qualify for a 30% investment tax credit if they begin construction before Jan. 1, 2026.
Stilwell d'Andrade expressed confidence in the long-term outlook for the American market, saying that electric demand is only expected to grow and that renewables are attractive because they offer pricing stability and can be developed more quickly than new gas-burning power plants or nuclear facilities.
The Rhode Island Office of Energy Resources, through a spokesman, said it's aware of the write-down but couldn't comment at this time on how a delay to SouthCoast Wind could affect state efforts to comply with mandates in the Act on Climate to curb greenhouse gas emissions.
Amanda Barker, clean energy program coordinator with Green Energy Consumers Alliance, said the SouthCoast Wind proposal and other offshore wind projects are essential for energy independence and combatting climate change as well as for supporting grid reliability and the state economy.
'We need to find a way to get these crucial projects over the finish line,' she said.
This article originally appeared on The Providence Journal: SouthCoast Wind faces possible 4-year delay under Trump presidency
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