US must end Vineyard uncertainty to maintain strong competition

On Tuesday, we heard from Vineyard Wind, the 50:50 joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners that is working on the 800MW Vineyard Wind project in the waters off Massachusetts.

Richard Heap
February 13, 2020
US must end Vineyard uncertainty to maintain strong competition

Is President Trump thawing on offshore wind? We know he doesn’t like it near his golf resort, and was last November hit with £225,000 legal expenses for a protracted legal battle he fought with the Scottish government in the 2010s.

But his position on wind farms in US waters is harder to discern. Let's look at two big but contradictory stories from the last few days.

The first is the decision by his administration this week to raise the offshore wind budget of the US Bureau of Offshore Energy Management. This is the organisation that handles the leasing of land in US waters to wind developers.

The administration has this week proposed a $188.8m budget for BOEM in the 2021 fiscal year, which includes around $26.5m to advance the development of offshore renewable energy. BOEM said it reflected the role of offshore wind in “securing the nation’s energy independence and supporting economic growth”.

This could speed up the rate that offshore wind sites are leased and permitted, and is news that should excite any European firms with designs on the North American offshore wind industry. But only if they know projects will be built – and this is where the Trump administration continues to sow uncertainty.

This brings us to the second story.

On Tuesday, we heard from Vineyard Wind, the 50:50 joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners that is working on the 800MW Vineyard Wind project in the waters off Massachusetts.

The project has been delayed since summer as the Trump administration has decided to reassess the potential environmental impacts of the offshore wind industry on US waters – and that delay continues to drag on.

The partners said earlier this week that their environmental impact statement would now not be published until 18th December 2020, which is 490 days later than it was originally due on 16th August 2019.

This means there is no chance the scheme will be able to be commissioned as planned in 2022, and it highlights the risk of delays at other offshore projects. The industry is watching with interest as the treatment of Vineyard Wind is an indication of future battles, and will delay economic benefits for coastal areas.

If you’d like to hear from the Vineyard Wind team, join us at Financing Wind North America in Boston, in partnership with UL, between 12th and 14th May. We’ve now published the agenda and you can click here to see a copy of it.

But those aren't the only big US offshore stories this week.

We heard yesterday that EDP Renewables and Shell have set a new low strike price for US offshore wind at their 804MW Mayflower Wind project, which is set to generate electricity at $58.47/MWh in its 20-year lifespan. It was named preferred bidder in the procurement round in Massachusetts in October.

This is below the $64.97/MWh at Vineyard Wind, which already seemed bold for a market with only one installed offshore wind project: the 30MW Block Island offshore wind farm owned by Ørsted.

Incidentally, Block Island is facing its own challenges with exposed cables. This project needs to go offline later as the owner re-buries cables and, while it is a site-specific challenge, this does show the teething problems owners can face in emerging offshore wind markets – and which can affect financial returns.

So it’s been a busy week for the US offshore wind sector, with a heady mix of good and bad news. But there are some themes to draw out of this.

Mayflower Wind has understandably hit the headlines for the low strike price, which shows that the offshore wind industry is confident that projects can be built at highly competitive rates.

In this context, it’s all very well if BOEM wants to use its increased budget to lease new offshore sites, but it’s only going to keep securing high prices as long as companies are confident that they’ll be able to build.

At present, the delays at Vineyard Wind caused by the Trump administration will only sow doubts in companies’ minds. Hopefully the saga will end this year.

NEWS IN BRIEF

EDF BUYS 50% OF 2GW CODLING PROJECT

EDF Renewables has bought a 50% stake in the 2GW Codling offshore wind project off the east coast of Republic of Ireland from Hazel Shore. EDF is set to partner with co-owner Fred Olsen Renewables, which owns 50%. Codling will be built on two sites, of which the 1GW Codling 1 is consented.

MITSUBISHI WINS €4.1BN ENECO BUYOUT APPROVAL

The European Commission has approved the €4.1bn acquisition of Dutch utility Eneco by Japan's Mitsubishi Corporation and Chubu Electric. Read more

WPD SIGNS PPA AT 192MW FINNISH PROJECT

German developer Wpd has agreed to supply electricity from its planned 192MW Karhunnevankangas wind farm in Finland to paper company UPM Kymmene under a long-term power purchase agreement. Read more

CLEARWAY REACHES 160MW RATTLENSNAKE CLOSE

Clearway Energy Group has secured debt financing for the 160MW Rattlesnake Flat wind project in Washington. The mandated lead arrangers were KeyBanc Capital Markets, Sumitomo Mitsui Banking Corporation and Mizuho Corporate Bank. Read more

SUNCOR PLACES 205MW SIEMENS GAMESA ORDER

Canadian oil and gas group Suncor has picked Siemens Gamesa turbines for its planned 205MW Forty Mile wind project in southern Alberta. Read more

SHELL AND EDPR HIT NEW LOW AT MAYFLOWER

Shell and EDPR are set to sell electricity from their 804MW Mayflower Wind offshore wind farm near Massachusetts for $58.47/MWh, which is a record low for US offshore wind. The pair won a tender last October. Read more

EDPR CONCLUDES SALE OF 137MW IN BRAZIL

EDP Renewables has concluded the sale of the 137MW Babilonia wind farm in Brazil to emerging markets investor Actis.

BP COMMITS TO NET ZERO BY 2050 GOAL

Utility giant BP yesterday committed to go net zero by 2050 with measures including increasing its investment in non-oil and gas businesses. Read more

Is President Trump thawing on offshore wind? We know he doesn’t like it near his golf resort, and was last November hit with £225,000 legal expenses for a protracted legal battle he fought with the Scottish government in the 2010s.

But his position on wind farms in US waters is harder to discern. Let's look at two big but contradictory stories from the last few days.

The first is the decision by his administration this week to raise the offshore wind budget of the US Bureau of Offshore Energy Management. This is the organisation that handles the leasing of land in US waters to wind developers.

The administration has this week proposed a $188.8m budget for BOEM in the 2021 fiscal year, which includes around $26.5m to advance the development of offshore renewable energy. BOEM said it reflected the role of offshore wind in “securing the nation’s energy independence and supporting economic growth”.

This could speed up the rate that offshore wind sites are leased and permitted, and is news that should excite any European firms with designs on the North American offshore wind industry. But only if they know projects will be built – and this is where the Trump administration continues to sow uncertainty.

This brings us to the second story.

On Tuesday, we heard from Vineyard Wind, the 50:50 joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners that is working on the 800MW Vineyard Wind project in the waters off Massachusetts.

The project has been delayed since summer as the Trump administration has decided to reassess the potential environmental impacts of the offshore wind industry on US waters – and that delay continues to drag on.

The partners said earlier this week that their environmental impact statement would now not be published until 18th December 2020, which is 490 days later than it was originally due on 16th August 2019.

This means there is no chance the scheme will be able to be commissioned as planned in 2022, and it highlights the risk of delays at other offshore projects. The industry is watching with interest as the treatment of Vineyard Wind is an indication of future battles, and will delay economic benefits for coastal areas.

If you’d like to hear from the Vineyard Wind team, join us at Financing Wind North America in Boston, in partnership with UL, between 12th and 14th May. We’ve now published the agenda and you can click here to see a copy of it.

But those aren't the only big US offshore stories this week.

We heard yesterday that EDP Renewables and Shell have set a new low strike price for US offshore wind at their 804MW Mayflower Wind project, which is set to generate electricity at $58.47/MWh in its 20-year lifespan. It was named preferred bidder in the procurement round in Massachusetts in October.

This is below the $64.97/MWh at Vineyard Wind, which already seemed bold for a market with only one installed offshore wind project: the 30MW Block Island offshore wind farm owned by Ørsted.

Incidentally, Block Island is facing its own challenges with exposed cables. This project needs to go offline later as the owner re-buries cables and, while it is a site-specific challenge, this does show the teething problems owners can face in emerging offshore wind markets – and which can affect financial returns.

So it’s been a busy week for the US offshore wind sector, with a heady mix of good and bad news. But there are some themes to draw out of this.

Mayflower Wind has understandably hit the headlines for the low strike price, which shows that the offshore wind industry is confident that projects can be built at highly competitive rates.

In this context, it’s all very well if BOEM wants to use its increased budget to lease new offshore sites, but it’s only going to keep securing high prices as long as companies are confident that they’ll be able to build.

At present, the delays at Vineyard Wind caused by the Trump administration will only sow doubts in companies’ minds. Hopefully the saga will end this year.

NEWS IN BRIEF

EDF BUYS 50% OF 2GW CODLING PROJECT

EDF Renewables has bought a 50% stake in the 2GW Codling offshore wind project off the east coast of Republic of Ireland from Hazel Shore. EDF is set to partner with co-owner Fred Olsen Renewables, which owns 50%. Codling will be built on two sites, of which the 1GW Codling 1 is consented.

MITSUBISHI WINS €4.1BN ENECO BUYOUT APPROVAL

The European Commission has approved the €4.1bn acquisition of Dutch utility Eneco by Japan's Mitsubishi Corporation and Chubu Electric. Read more

WPD SIGNS PPA AT 192MW FINNISH PROJECT

German developer Wpd has agreed to supply electricity from its planned 192MW Karhunnevankangas wind farm in Finland to paper company UPM Kymmene under a long-term power purchase agreement. Read more

CLEARWAY REACHES 160MW RATTLENSNAKE CLOSE

Clearway Energy Group has secured debt financing for the 160MW Rattlesnake Flat wind project in Washington. The mandated lead arrangers were KeyBanc Capital Markets, Sumitomo Mitsui Banking Corporation and Mizuho Corporate Bank. Read more

SUNCOR PLACES 205MW SIEMENS GAMESA ORDER

Canadian oil and gas group Suncor has picked Siemens Gamesa turbines for its planned 205MW Forty Mile wind project in southern Alberta. Read more

SHELL AND EDPR HIT NEW LOW AT MAYFLOWER

Shell and EDPR are set to sell electricity from their 804MW Mayflower Wind offshore wind farm near Massachusetts for $58.47/MWh, which is a record low for US offshore wind. The pair won a tender last October. Read more

EDPR CONCLUDES SALE OF 137MW IN BRAZIL

EDP Renewables has concluded the sale of the 137MW Babilonia wind farm in Brazil to emerging markets investor Actis.

BP COMMITS TO NET ZERO BY 2050 GOAL

Utility giant BP yesterday committed to go net zero by 2050 with measures including increasing its investment in non-oil and gas businesses. Read more

Is President Trump thawing on offshore wind? We know he doesn’t like it near his golf resort, and was last November hit with £225,000 legal expenses for a protracted legal battle he fought with the Scottish government in the 2010s.

But his position on wind farms in US waters is harder to discern. Let's look at two big but contradictory stories from the last few days.

The first is the decision by his administration this week to raise the offshore wind budget of the US Bureau of Offshore Energy Management. This is the organisation that handles the leasing of land in US waters to wind developers.

The administration has this week proposed a $188.8m budget for BOEM in the 2021 fiscal year, which includes around $26.5m to advance the development of offshore renewable energy. BOEM said it reflected the role of offshore wind in “securing the nation’s energy independence and supporting economic growth”.

This could speed up the rate that offshore wind sites are leased and permitted, and is news that should excite any European firms with designs on the North American offshore wind industry. But only if they know projects will be built – and this is where the Trump administration continues to sow uncertainty.

This brings us to the second story.

On Tuesday, we heard from Vineyard Wind, the 50:50 joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners that is working on the 800MW Vineyard Wind project in the waters off Massachusetts.

The project has been delayed since summer as the Trump administration has decided to reassess the potential environmental impacts of the offshore wind industry on US waters – and that delay continues to drag on.

The partners said earlier this week that their environmental impact statement would now not be published until 18th December 2020, which is 490 days later than it was originally due on 16th August 2019.

This means there is no chance the scheme will be able to be commissioned as planned in 2022, and it highlights the risk of delays at other offshore projects. The industry is watching with interest as the treatment of Vineyard Wind is an indication of future battles, and will delay economic benefits for coastal areas.

If you’d like to hear from the Vineyard Wind team, join us at Financing Wind North America in Boston, in partnership with UL, between 12th and 14th May. We’ve now published the agenda and you can click here to see a copy of it.

But those aren't the only big US offshore stories this week.

We heard yesterday that EDP Renewables and Shell have set a new low strike price for US offshore wind at their 804MW Mayflower Wind project, which is set to generate electricity at $58.47/MWh in its 20-year lifespan. It was named preferred bidder in the procurement round in Massachusetts in October.

This is below the $64.97/MWh at Vineyard Wind, which already seemed bold for a market with only one installed offshore wind project: the 30MW Block Island offshore wind farm owned by Ørsted.

Incidentally, Block Island is facing its own challenges with exposed cables. This project needs to go offline later as the owner re-buries cables and, while it is a site-specific challenge, this does show the teething problems owners can face in emerging offshore wind markets – and which can affect financial returns.

So it’s been a busy week for the US offshore wind sector, with a heady mix of good and bad news. But there are some themes to draw out of this.

Mayflower Wind has understandably hit the headlines for the low strike price, which shows that the offshore wind industry is confident that projects can be built at highly competitive rates.

In this context, it’s all very well if BOEM wants to use its increased budget to lease new offshore sites, but it’s only going to keep securing high prices as long as companies are confident that they’ll be able to build.

At present, the delays at Vineyard Wind caused by the Trump administration will only sow doubts in companies’ minds. Hopefully the saga will end this year.

NEWS IN BRIEF

EDF BUYS 50% OF 2GW CODLING PROJECT

EDF Renewables has bought a 50% stake in the 2GW Codling offshore wind project off the east coast of Republic of Ireland from Hazel Shore. EDF is set to partner with co-owner Fred Olsen Renewables, which owns 50%. Codling will be built on two sites, of which the 1GW Codling 1 is consented.

MITSUBISHI WINS €4.1BN ENECO BUYOUT APPROVAL

The European Commission has approved the €4.1bn acquisition of Dutch utility Eneco by Japan's Mitsubishi Corporation and Chubu Electric. Read more

WPD SIGNS PPA AT 192MW FINNISH PROJECT

German developer Wpd has agreed to supply electricity from its planned 192MW Karhunnevankangas wind farm in Finland to paper company UPM Kymmene under a long-term power purchase agreement. Read more

CLEARWAY REACHES 160MW RATTLENSNAKE CLOSE

Clearway Energy Group has secured debt financing for the 160MW Rattlesnake Flat wind project in Washington. The mandated lead arrangers were KeyBanc Capital Markets, Sumitomo Mitsui Banking Corporation and Mizuho Corporate Bank. Read more

SUNCOR PLACES 205MW SIEMENS GAMESA ORDER

Canadian oil and gas group Suncor has picked Siemens Gamesa turbines for its planned 205MW Forty Mile wind project in southern Alberta. Read more

SHELL AND EDPR HIT NEW LOW AT MAYFLOWER

Shell and EDPR are set to sell electricity from their 804MW Mayflower Wind offshore wind farm near Massachusetts for $58.47/MWh, which is a record low for US offshore wind. The pair won a tender last October. Read more

EDPR CONCLUDES SALE OF 137MW IN BRAZIL

EDP Renewables has concluded the sale of the 137MW Babilonia wind farm in Brazil to emerging markets investor Actis.

BP COMMITS TO NET ZERO BY 2050 GOAL

Utility giant BP yesterday committed to go net zero by 2050 with measures including increasing its investment in non-oil and gas businesses. Read more

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