SouthCoast Wind reaches agreement to terminate Massachusetts PPAs
An offshore wind turbine at sea. Image source: Iberdrola (www.iberdrola.com)
SouthCoast Wind, a joint venture between Shell New Energies US LLC and Ocean Winds North America, has reached an agreement with the Massachusetts electric distribution companies to terminate the existing power purchase agreements (PPAs) associated with the namesake offshore wind project.
SouthCoast Wind had in place contracts to deliver 1,200 MW of generation. According to the termination agreements filed on Tuesday for approval by the Department of Public Utilities (DPU), the joint venture will make termination payments totalling USD 60 million (EUR 55m) to the utilities.
SouthCoast Wind unveiled in June that it started discussions with representatives of Massachusetts and the distribution companies to scrap the PPAs and said it planned to rebid the project in the state’s next offshore wind round. Massachusetts, meanwhile, just issued its fourth offshore wind solicitation.
According to the developer’s announcement in June, “termination, and payment of a financial penalty for termination, has become the prudent commercial course to realise the project due to material and unforeseen supply chain and financing cost increases affecting the whole offshore wind industry.”
Avangrid Inc (NYSE:AGR), part of Spain’s Iberdrola, similarly moved to terminate the Massachusetts PPAs for its 1,200-MW Commonwealth Wind earlier this month. The company agreed to pay a termination fee of USD 48 million.
Massachusetts is continuing with its efforts to establish itself as an offshore wind industry hub and on Wednesday issued a request for proposals for up to 3,600 MW of offshore wind capacity.