Mayflower Wind Appeals for Delay due to Inflation and Supply Hardships
The challenges to Massachusetts’ plans for the rapid development of offshore wind power generation are continuing to mount as Mayflower Wind repeated its appeal to regulators to provide additional time to address the changing finances of the projects. The project developer in a filing with the Massachusetts Department of Public Utilities dated December 23 requested additional time for coordinated discussions with all parties before making a final decision on the power purchase agreements negotiated in the spring of 2022.
A partnership between Shell New Energies and Ocean Winds North America (a joint venture between EDP Renewables and ENGIE) holds the lease for a 199-square mile area located over 30 miles south of Martha’s Vineyard and 20 miles south of Nantucket that is slated to produce a total of 2,400 MW of electricity. In May 2022, the project known as Mayflower Wind, reached its initial power purchase agreements for the first 1,200 MW of power but in October asked the DPU to delay the review process starting a back-and-forth debate between the state, the power companies, and the project developers.
The neighboring Commonwealth Wind project also appealed for the delay from the DPU to which the regulators told both projects either to proceed with the power purchase agreements or withdraw. Mayflower initially said it would proceed while continuing the appeal for revisions to the agreements, but earlier in December Commonwealth said it was withdrawing and proposed including its project in a new competitive auction scheduled for 2023.
Mayflower Wind in its filing last week to the DPU now says that it agrees with “the factual analysis underlying Commonwealth Wind’s conclusion, especially as Mayflower is subject to these same facts, pressures, and realities.” While stopping short of also abandoning the power purchase agreements and withdrawing, Mayflower repeated that additional discussions are required.
Detailing its position, the project’s developers cited in the filing “current extraordinary global economic conditions, including unexpected and significant commodity price increases and supply shortages.” While saying that these factors could not have been reasonably foreseen, they argue that they have materially increased the expected cost of financing and constructing the Mayflower Wind Project. They also highlight the finances changed dramatically and unexpectedly as interest rates have risen sharply.
Mayflower Wind reports that it is diligently working to develop and provide to the DPU a “detailed third-party analysis on the impact of these unforeseen events on the ‘financeability’ on the Mayflower Wind Project.” While saying that they continue to develop the project consistent with the timelines in its PPAs, Mayflower Wind is also renewed its call for the DPU to delay a decision on the agreements.
Massachusetts’ outgoing governor has said that he believes the wind farm developers should not be permitted to reopen contract negotiations while the incoming governor has said it is a matter for the DPU to decide.
The Massachusetts DPU is still reviewing the filings from both wind projects. The delays and the potential that there could be renewed negotiations for the power purchase agreements at the very least likely means a delay for the two projects. It could also possibly place both projects in jeopardy as Massachusetts and the Biden administration push to move forward with expanding renewable, clean sources of energy.