CT - Avangrid cancels CT offshore energy project, wants to rebid, as industry hit by adverse economic head winds
Electric utility Avangrid is pulling out of what was to have been Connecticut’s biggest offshore wind project, Park City Wind, saying inflation and other adverse economic factors that have hit the offshore wind industry made the project “unfinanceable.”
The decision by Avangrid, part of the Spanish energy giant Iberdrola Group, was widely expected and mirrors the financial headwinds confronting other players in the multi-billion dollar northeast offshore wind market.
Avangrid had been negotiating for a year with the administration of Gov. Ned Lamont in an ultimately unsuccessful effort to obtain more favorable terms on the contract, or power purchase agreement it won through competitive bidding to provide electricity to Connecticut ratepayers.
Price spikes, higher interest rates and supply chain bottlenecks since the bid award – much of them attributable to the war in Ukraine – turned the project into a money loser at its contracted price and Avangrid has opted to pay the $16 million withdrawal penalty rather than move forward.
The company said in a statement that it warned the Lamont administration a year ago that the Park City Project was “unfinanceable under its existing contracts.”
“After exploring all potential solutions to the financial challenges facing the project, and engaging in good-faith and productive discussions with Connecticut state officials regarding these challenges, it is clear the best path forward for Park City Wind is in the termination of the Power Purchase Agreements and a rebid of the project,” the company statement said.
Lamont, who has aggressively pushed offshore wind as a reliable energy source, had refused to discuss the talks with Avangrid, but said Tuesday he is “disappointed” by the company decision to walk away from Park City Wind.
“ Offshore wind remains a critical resource to meet state, regional, and federal clean energy goals and help maintain reliable operations in the wintertime while creating thousands of good-paying jobs,” Lamont said.
