Avangrid chief executive Pedro Azagra told investors on Thursday that his company will postpone its Commonwealth Wind and Park City Wind projects planned for south of Martha’s Vineyard by a year and go back to the negotiating table to rewrite contracts for the offshore wind farms because of supply chain issues.
The Connecticut-based energy company’s move underscores the challenges New England faces as policymakers try to transition the electric grid to rely more heavily on renewable sources instead of natural gas.
Commonwealth Wind will provide about 1,200 megawatts of electricity, or enough power for up to 750,000 homes, to Massachusetts residents and businesses, while Park City will supply about 800 megawatts to Connecticut ratepayers. Avangrid now plans to finish Park City by 2027, instead of 2026. And the company’s Commonwealth Wind project won’t be finished until 2028, instead of 2027.
Azagra pointed to sharp changes in commodity prices, particularly for steel, that have taken place since bids were submitted for Park City in 2019 and Commonwealth Wind last year. Azagra said he expects only a modest increase in price will result from renegotiating with suppliers as well as with the utilities that are buying the power and the state officials that orchestrated the auctions.
“If you would do an auction right now, the prices would be materially different,” Azagra said in an interview after a presentation to investors in New York about the company’s financial outlook and clean-energy investments. “We need to be realistic right now. The world has changed.”
Meanwhile, Avangrid’s 800-megawatt Vineyard Wind joint venture, which would be the country’s first utility-scale offshore wind farm, remains on track to start providing electricity by the end of 2023. The Vineyard Wind project, planned for waters about 15 miles south of Martha’s Vineyard, has already been delayed numerous times, largely by permitting issues during the Trump administration. The Park City and Commonwealth projects would go up in the same lease area controlled by Avangrid, but further from shore, to the southwest of Vineyard Wind.
Even with the delays, Azagra said the company’s wind farms will still be completed within timeframes allowed by the existing contracts.
Waiting an extra year could buy Avangrid more time for wind turbine manufacturers to roll out larger turbines than the 13-megawatt towers made by General Electric that are planned for Vineyard Wind. GE recently lost a lawsuit over whether the turbines, known as the Haliade-X, violated a patent. The judge in that case approved a carveout for Vineyard Wind. Azagra said that ruling had no bearing on the decision to push out the completion dates for the other two projects.
The judge’s decision and Avangrid’s timing change represent setbacks for the nascent offshore wind industry — an industry that’s crucial to greening New England’s grid.
“It’s not all that surprising given the supply chain constraints that some of these projects are being delayed,” said Susannah Hatch, director of clean energy policy at the Environmental League of Massachusetts. “Obviously, it’s worrisome. We need to get these projects up and running as soon as is responsibly allowable given that they are such a critical tool for combatting climate change. We need to keep our foot on the pedal.”
New England is currently served by just one offshore wind farm, a small one with five turbines — which together generate 30 megawatts — that opened off Block Island in 2016. Vineyard Wind would be next, bringing 800 megawatts. Revolution Wind, to be developed by Ørsted and Eversource, is scheduled to start providing 700 megawatts of electricity to Connecticut and Rhode Island customers in 2025. The Mayflower Wind venture will bring 1,200 megawatts to Massachusetts customers in 2028. By that point, the turbines in Avangrid’s Park City and Commonwealth projects should be spinning, generating 2,000 megawatts. (Maine officials are also pursuing a 12-megawatt single floating turbine as a demonstration project.)
Taken together, all those contracts represent nearly 4,800 megawatts, possibly enough for nearly 3 million homes. But with electric demand expected to climb, many more turbines need to be built. ELM estimates that New England will need at least 12,000 megawatts of offshore wind to support one-third of the region’s electricity demands in 2030. And by 2050, with the predicted rise of electric cars and heating, Hatch said Massachusetts officials anticipate the region needs upwards of 30,000 megawatts of offshore wind to keep pace with the states’ carbon reduction goals.
“We’ve got a ton of work to do,” Hatch said, “in the near and long term.”
Peter Shattuck, New England president of transmission developer Anbaric, said Avangrid’s announcement should serve as a wakeup call for state officials to address the increasing issues related to finding the right places to connect power lines from these wind farms to the region’s grid “so that the industry can make up for lost time when supply chain issues recede.”