Rhode Island Energy said it will not enter a power purchase agreement for the proposed Revolution Wind 2 project because the projected costs to electric customers are too high.
The decision is a setback for offshore wind developers Ørsted and Eversource – coming just after the federal Bureau of Ocean Energy Management announced it had completed an environmental review for the partners’ first-phase Revolution Wind project.
The Revolution Wind 2 decision, announced Tuesday by Dave Bonenberger, president of Rhode Island Energy, stated that “affordability and reliability would be key factors in how the company evaluated” offshore wind bids.
“Higher interest rates, increased costs of capital and supply chain expenses, as well as the uncertainty of federal tax credits, all likely contributed to higher proposed contract costs,” according to the company. “Those costs were ultimately deemed too expensive for customers to bear and did not align with existing offshore wind PPAs (power purchase agreements).”
The decision adds to the offshore wind industry’s troubles from rising costs, which already have developers looking to cancel contracts for two projects off Massachusetts and re-bid them in 2024.
In New Jersey, state legislators approved a last-minute budget vote that will allow Ørsted to use federal renewable energy tax credits for its Ocean Wind 1 project – instead of redirecting credits to lower customers’ bills – in a bid by Gov. Phil Murphy’s administration to keep the flagship project viable.
The Revolution 2 proposal was the only bid received by Rhode Island Energy in response to its Request for Proposals (RFP) in October 2022 for an additional 600 to 1,000 megawatts of offshore wind capacity.
The utility says its rejection decision “comes after a thorough, four-month evaluation of the bid, which was completed in consultation with the Rhode Island Office of Energy Resources and the Division of Public Utilities and Carriers.
Read more at nationalfisherman.com.
