SouthCoast Wind developer to pay $60.4M to break contracts with Mass. utility companies

SOUTHCOAST WIND Energy LLC is among a sea of offshore wind developers facing economic headwinds that have driven up project costs. Which is why the Massachusetts company announced last fall it wanted to cancel its existing agreements – inked before costs went up – to try and get a better deal. The decision has ripple effects in Rhode Island, since plans to run an underwater transmission line from the wind farm up the Sakonnet River, over Portsmouth, and out Mount Hope Bay require ESFB approval. / AP FILE PHOTO/DAVID GOLDMAN

Breaking a contract comes at a price.

In the case of the Massachusetts offshore wind developer reneging on its power purchase agreements with utility companies, that cost is $60.4 million, according to public filings shared with the R.I. Energy Facility Siting Board on Sept. 8.

SouthCoast Wind Energy LLC is among a sea of offshore wind developers facing economic headwinds that have driven up project costs. Which is why the Massachusetts company announced last fall it wanted to cancel its existing agreements – inked before costs went up – to try and get a better deal. The decision has ripple effects in Rhode Island, since plans to run an underwater transmission line from the wind farm up the Sakonnet River, over Portsmouth, and out Mount Hope Bay require ESFB approval.

Rhode Island regulators have since agreed to put their transmission line review on hold until the developer secures new agreements guaranteeing the project’s financing, although the company is challenging that decision in R.I. Supreme Court.

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Meanwhile, SouthCoast is making moves to officially end its existing agreements with the three Massachusetts utility companies that would have bought electricity from its 149-turbine wind farm. In order to get out of the agreements with Eversource Energy, National Grid and Unitil, SouthCoast will have to pay a termination fee totaling $60.4 million, new documents show. The payment is due within 15 days of approval by the Massachusetts Division of Public Utilities, a date for which has not been set as of Monday.

The RI ESFB in its July decision to suspend review of the transmission line for the project gave the developer until Oct. 1, 2024, to submit proof that it has won a new contract with Massachusetts. According to a draft timeline filed with the Massachusetts Department of Public Utilities, the state anticipates awarding a bid and starting negotiations for power purchase agreements on up to 3,600 megawatts of wind power in June 2024.

In an emailed statement on Monday, Rebecca Ullman, a spokesperson for SouthCoast Wind, reaffirmed the company’s commitment to bringing offshore wind energy to the region.

“Closing the Massachusetts power purchase contracts was never the plan but impacts of Covid-related supply chain disruptions and the war in Ukraine made them unfinanceable,” Ullman said.

“This development enables SouthCoast Wind to move forward and to compete in upcoming solicitations. The project is full steam ahead – we have budgeted $100 million this year alone to advance our project, and our federal, state, and local permitting is progressing.”

Nancy Lavin is a staff writer for the Rhode Island Current.

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