Now that Rhode Island Energy has rejected the only bid received to bring 600 to 1,000 megawatts of offshore wind to the Ocean State, some are pointing to the decision as a warning sign of troubles ahead as the state tries to reach 100% renewable energy use by 2033.
The state's dominant utility opted not to proceed with a power-purchase agreement for the proposed 884-megawatt Revolution Wind 2 wind farm, saying the costs were too high and the agreement did not meet the state’s Affordable Clean Energy Security law.
Opponents of offshore wind pounced on the decision, arguing the costs of electricity from offshore will be three times that of natural gas by 2026, according to the U.S. Energy Information Administration.
But offshore wind supporters insist that the state and Rhode Island Energy cannot afford to abandon plans for renewables, whatever the cost.
“I'm optimistic that long-term prognosis is looking great. Timing is always a factor,” said Larry Chretien, executive director of the nonprofit Green Energy Consumers Alliance Inc., which has offices in Providence. “Many other contracted projects are running well around the world. It's probably an anomaly. Things are going to settle down.”
Chretien believes consumers are willing to invest upfront for longer-term financial and environmental benefits.
“It’s a double-edged sword. You have to bite the bullet for the cost upfront,” he said. “You always must pick a moment in time. Climate change is not going away because of this.”
Chretien says he hopes state agencies charged with oversight heavily securitize the proposed power-purchase agreement and shouldn’t “rubberstamp the rejection” or allow document redactions to fog the reasoning used not to move forward.
Timmons Roberts, Ittleson professor of environmental studies and sociology at Brown University and the executive director of the Climate Social Science Network, which focuses on the politics of climate change, said the issues facing Revolution Wind 2 were “mostly about inflation and interest rates,” and that the bid was likely not in line with “current economics.”
Revolution Wind 2 is a venture involving Osted A/S and Eversource Energy. Asked whether the Rhode Island Energy rejection is an isolated development or a harbinger of the wind energy's future, an Orsted spokesperson declined to comment, citing the company's previous statements saying they were “disappointed” and will “assess our options.”
But Orsted is aware of the changing economic headwinds. Its chief executive, Mads Nipper, said in the company’s May earnings call he believes the wind farm energy companies “are operating in an industry which is clearly realizing that the conditions have changed both in terms of cost of capital and ... inflation.”
Rhode Island Energy had sought offshore wind bids as part of the state's Affordable Clean Energy Security Act passed in 2022, the state legislation requiring that 100% of all electricity sold in Rhode Island be generated from renewable sources by 2033. It's considered one of the most aggressive renewable energy standards in the country.
The utility company said the plan was not “commercially reasonable” and did not satisfy the state law, which requires all projects to reduce energy costs. The utility cited supply chain snags, increased borrowing costs and “the uncertainty of federal tax credits.”
Rhode Island Energy also cited undefined “other factors” in rejecting the power-purchase agreement. A spokesperson for the company, Ted Kresse, declined to offer more detail. He said more information would become available when the company files a document with the R.I. Public Utilities Commission within 60 days, though certain parts may be redacted for privacy purposes. State agencies and the applicants, who boasted of $2 billion in economic benefits, as well as hundreds of union jobs, will also have a chance to comment.
In a statement, Rhode Island Energy President David Bonenberger said the company is “in discussions with state and regional leaders about new opportunities to bring more offshore wind to the state, which we hope to progress in the coming months.”
Chretien says that those questioning whether Rhode Island can meet its targets have a sort of amnesia. The volatility of traditional energy markets and ever-rising costs are well known. Rhode Island Energy recently announced that winter electricity rates could spike 24% this winter. Last year’s increase was close to 50% for the average user.
The utility should issue another request for proposal and consider a larger project to take advantage of economies of scale, Chretien says. To do otherwise would contribute to “planetary suicide,” he said.
