Project Cost Uncertainty Drives New Impacts for Offshore Wind
Project Cost Uncertainty Drives New Impacts for Offshore Wind
Abstract
New Jersey utility Public Service Enterprise Group says it is exiting direct investment in the 1.1-GW Ocean Wind 1 offshore wind energy project set to be built off the state's coast, inking a deal to sell its 25% equity stake in the multibillion-dollar project to its partner, Denmark-based developer Orsted and grant it full ownership. The rumored move follows steps taken in recent weeks by two Massachusetts wind project owners to revise or cancel power supply contracts, claiming unforeseen rapid rises in development costs. In a statement, PSEG Chief Commercial Officer Lathrop Craig said "a better positioned tax investor [should] join the project so it can proceed with an optimized tax structure." David Hardy, Americas CEO of Orsted, which also plans a second New Jersey wind project, said Ocean Wind 1 is on track to deliver its first power by the end of 2024The utility firm said it would invest in land-based infrastructure that would link to the state grid that project and other offshore wind facilities the state has committed to build. New Jersey has already taken industry-leading steps to boost that infrastructure, including award of a $1-billion project late last year to connect wind projects to an existing power substation that could handle 6.4 GW and use existing rights of way. One Massachusetts developer, utility firm Avangrid, filed suit Jan. 19 in the state supreme court to appeal state regulators' Dec. 30 approval of existing power contracts with three state utilities for its 1.2- GW Commonwealth Wind project. The backers of the 800-MW Mayflower Wind project are asking Massachusetts regulators for more time to assess financial issues of its current power contracts. On an earnings call, CEO Mads Nipper cited gains from global offshore wind asset sales and better than expected earnings from onshore wind and solar projects, as well as from work on power plants and gas facilities.