By Robert Bradley Jr. — November 2, 2022
“… global commodity price increases … sharp and sudden increases in interest rates, prolonged supply chain constraints, and persistent inflation have significantly increased the expected cost of constructing the project.”
Electricity rates are going up because of wind, solar, and batteries being forced upon, and duplicating, the grid. Reliability is going down because of wind and solar intermittency. And higher interest rates are (further) ruining the economics of the infrastructure-heavy, up-front capital necessary to turn “free” wind and solar into electricity.
It’s a perfect storm that might just overcome the taxpayer largesse of the federal subsidies (DOE and IRS) and rate averaging for captive ratepayers. With offshore wind experimental and extra-uneconomic, the worst can be assumed.
An October 30, 2022, article by Colin Young, “Major Massachusetts offshore wind project no longer viable,” explains the fluid situation.
A major offshore wind project in the Massachusetts pipeline “is no longer viable and would not be able to move forward” under the terms of contracts filed in May. Both developers behind the state’s next two offshore wind projects are asking state regulators to pause review of the contracts for one month amid price increases, supply shortages and interest rate hikes….
A one-month freeze, the developer said, “would give the parties an opportunity to evaluate the current situation facing the project and potentially agree upon changes to the PPAs, along with other measures, that could allow the project to return to viability.”
“As has been publicly reported in recent weeks, global commodity price increases, in part due to ongoing war in Ukraine, sharp and sudden increases in interest rates, prolonged supply chain constraints, and persistent inflation have significantly increased the expected cost of constructing the project. As a result, the project is no longer viable and would not be able to move forward absent amendments to the PPAs,” attorneys for Commonwealth Wind wrote in their motion.
The developer’s brief highlights “cost saving measures, tax incentives under the newly enacted Inflation Reduction Act, an increase in the PPA prices, and improvements to Project efficiencies” as the possible approaches to restoring their project to viability. The developer also said that it “remains fully committed to the project and to delivering cost-effective renewable energy from the project to the residents and businesses of Massachusetts in a manner that advances the purposes of [the state’s clean energy law] and the Commonwealth’s energy and climate policies.”
The Boston Globe reported last month that a top Avangrid executive told investors that the company expected Commonwealth Wind and Park City Wind (a project intended to provide power to Connecticut) to each be delayed by a year as they sought contract revisions. CEO Pedro Azagra said Commonwealth Wind is now expected to go live in 2028, the Globe reported….
Commonwealth Wind said that “the IRA benefits to the project are not fully known at this time and not anticipated to make the project economic absent other changes to the PPAs,” but told DPU that it “believes there may be potential opportunities to share benefits associated with the IRA with ratepayers and would be willing to explore those opportunities with stakeholders.”
It is unclear when a DPU decision will come, but the agency had previously set a Tuesday deadline for briefs related to the latest offshore wind contract….
Final Comment
The above article comes from the New Bedford Light, not the New York Times. But if the impasse continues without additional subsidies from Massachusetts authorities or captive ratepayers, it will deserve national attention.
One can only hope that local ratepayers reject associated rate hikes and preserve their shorelines at the same time. And may Commonwealth Wind’s problems serve as a warning that not only nuclear (Plant Vogtle) but also offshore wind is subject to significant risk to its developers.
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Hold on, now. That project can still be done. It’s just going to cost a little bit more than they budgeted for.
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Okay. It’s going to be more than a little bit, but it’ll all be worth it if Massachusetts “Saves The Planet” right?
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Besides, eating is highly overrated. No need to waste all that money on food when you can be spending it all on whirligigs and sparky cars.
But-
The developer also said that it “remains fully committed to the project
Of course he is, as long as it gets built, he gets paid.
Because if the developer voluntarily quits, he or she is likely liable for some damages for non-performance to somebody. If it is “impossible” and “I am fully committed to trying as hard as I can, folks!”, then, it is deemed to be no fault of developer, so she or he would not have to pay penalties of some sort. Just a guess.
Rising interest rates kill renewables projects.
They’re almost 100% capital with minimal O&M costs. Just like buying a house with a 9% mortgage instead of 3% – it sucks.
Coal and gas plants are closer to buying a car you’re going to drive a lot. Fuel costs and efficiency matter more than capital cost and debt rates.
And nuclear in is the same situation as renewables. Coal and gas power plants are the best solutions for the foreseeable future.
I was stationed at the now closed Ft. Devens, MA for 5 1/2 years. I never have, still don’t understand how the hot bed of liberty, the place of the Tea Party, the Boston Massacre, the Liberty tree, and the Shot Heard around the world, and what was a most fervent abolitionist State during the Civil War became what it is.
Now it looks like the leftist morons that abound in that state are going to get what they’ve been voting for such a very long time:
Biden Brags About Shutting Down Massachusetts Coal Energy Plant After Massachusetts Energy Company Announces 64% Increase in Electricity Rates – The Last Refuge (theconservativetreehouse.com)
Heck of a lot of fuel oil heating going on up there too.
“Heck of a lot of fuel oil heating going on up there too.” But not for long. No pipelines, no fuel oil. No gas pipelines. Thank you NY. I think MA may be turning more blue, as in freezing to death!
Joe Biden announced Friday (yesterday) that his administration plans to shut down all coal plants in the US and replace them with wind and solar. Maybe he had not heard about this little problem in Massachusetts.
Biden is crazy.
There are a lot of coal mines in Pennsylvania.
Pennsylvanians will be voting for coal-loving Republicans on Tuesday.
I hope you are right.
Just a reminder Tom: This was the vote count when the polls closed during the 2020 selection:
As Stalin is reputed to have said, it doesn’t matter who votes. What matters is who counts the votes.
He also repeated the lie that wind and solar are cheaper than fossil fuels.
And his good buddy Joe Manchin is not happy at having been undercut on this.
So you really think Joe Manchin didn’t know this was coming? He knew and has known for a long time,
I am sure that if they do a Stage 2 feasibility study, the projected winds will strengthen and become more consistent, and then it will be a goer.
The most important fact is people don’t want it because it is not reliable and costs too much. So why do politicians want it! Personal reasons perhaps.
In the article, “An October 30, 2020, article by Colin Young” should be “An October 30, 2022, article by Colin Young
Some years ago I redid the EIA LCOE numbers for CCGT and on shore wind to correct a number of egregious mistakes resulting in EIA asserting they were about the same. Post ‘True Cost of Wind over at Judith’s. CCGT $58/MWh, on shore wind $146. And EIA has off shore wind at about 3x onshore. Economically hopeless.
An alternate to California’s proposed 4.2 GW offshore wind project:
4.2 GWs = roughly 680 6MW turbines or 252 17MW turbines
• Miles offshore with an expensive undersea power network
• No thermal use for industry
• Radar Interference is a security threat
• Intermittent low-density Energy
Vs
The least impacting energy source on nature:
https://businessdevelopmentinternational.biz/seaborg-co/
• 21 Seaborg 200 MW CMSR p
ower barges or 5 GW CMSR power barges
• Float them into any sea or river port near the local grid
• 24-year return to the shipyard for recycling
• Thermal Industrial and Desalination use
• The least impacting energy source on nature
• 24/7/365 Energy inexpensive as Coal
“Green” energy isn’t.
It’s more polluting to build solar and wind farms than it is to build and run conventional NatGas power plants. (Coal gasification (SynGas) can make coal fired power plants as clean burning as NatGas plants).
It is more ecologically destructive to generate the quantities of needed energy from wind and solar. Small footprint, high energy density conventional power plants will need to be replaced with massive acreages of wind and solar “farms” due to “green” being unreliable and inefficient. Technology for “green” will never catch up – the wind and solar conversion efficiencies are already virtually at the limits possible due to immutable laws of physics and chemistry.
The lifespan of solar and wind farms is miniscule compared to conventional power plants and so the cost of removing and disposing of (there is no recycling economically possible) the massive farms every 15-20 years will further destroy the ecology and environment.
It is much more expensive to build. Again mostly because of the scale needed to overcome inefficiencies, (as has been learned by the Mass wind farm proponents who now have to pull the plug) the cost to build the “farm” will NEVER be recouped, making energy production costs orders of magnitude greater for wind and solar than for conventional power generation.
Solar farms are being subsidized and costs covered up by redirecting them to higher energy costs for conventional energy customers (those jumping on the solar farms get a TEMPORARY kickback to alleviate their portion of the higher costs).
I want to know more about these “supply chain constraints” weasel words that we keep hearing. Be more explicit about what the problems are. Most likely one of:
Single sourcing critical components (China)Budgeting based upon slave labor rates no longer available (slaves died of COVID)Pathetically poor performance of California docks/workers/managementUneconomic to carry components due to Brandon The Magnificent’s fuel policiesToo few trucks meet Californian standards to access West coast portsEveryone else uses it to cover inept management, so why shouldn’t we?No longer accept that phrase without an explanation of what dumb decisions management made that is screwing things up.
Well, that was a dismal failure. Bullet points looked ok until I came back to take a look, then just a horrible mess. Lets try again…
I want to know more about these “supply chain constraints” weasel words that we keep hearing. Be more explicit about what the problems are. Most likely one of:
No longer accept that phrase without an explanation of what dumb decisions management made that is screwing things up.
Brandon the Magnificent 😅
Oops. Wrong photo.
That’s funny, I didn’t think cost had anything to do with offshore advocacy tax mining projects.
Let’s see now, fighting inflation raises interest costs to levels that kill the projects and not doing much to fight inflation leads to hyperinflation (Turkey). Faux concern for slave labor in western China helps much like slave labor helped Germany a generation ago. Not paying climate dues helps and keeping the 80% tax rates on money changers buys time. It’s a voter and leadership fail.
Translation:
Increase the subsidies or the planet gets it.
The real risk is utility regulators getting compromised by politicos, lobbyists, and advocacy groups leaving ratepayers to take the fall.
Too late, already happening.
Here in New Jersey, the top 10 White guys mining for solar panel subsidies receive around $10 per month from every low income citizen in the form of “green” electric bills.
Just think, every African American household in Camden and Newark is directly paying some rich White guys $10 per month!
Panhandling should be illegal, especially forced panhandling from the poorest of the poor by the richest of the rich.
It’s MA though. They deserve to take the hit.
If it’s not viable, then abortion is the humane choice, right? Scalp. Cannibalize. Sequester.
So would a generator using tides/gravity in the ocean, utilizing a float with a 1500 ft x 1500 ft surface have a potential of approx 1 mW per foot of tide used? That is my Calc ‘on the back of the envelope’. Guess that’s a big rig for a few mW. But consistent.
The project has always been nonviable, they just waited till the last moment to ask for more money in the hopes that they could pull a fast bait and switch on the taxpayers.
Not this project, but I would like to see a wind farm in view and hearing distance of Obama’s Martha vineyard or Nantucket house
I literally have no sympathy nor empathy for people who continually and repeatedly fly into these green globalist flames. I want them to get exactly what they voted for. The sooner the better. All the dots are there for them to connect and willfully refuse to connect then.