Axios Pro: Climate Deals

October 31, 2022

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🎃 Happy Monday, and Happy Halloween from Climate Deals.

1 big thing: Sailing into a New England windstorm

Wind turbines. Photo: Jens Büttner/picture alliance via Getty Images

Soaring inflation and commodities prices are threatening to sink two major wind projects off the coast of Massachusetts, their developers say.

Why it matters: The revelations, disclosed in a pair of filings to regulators, reflect the upheaval roiling clean energy developers, Alan writes.

What's happening: Commonwealth Wind and Mayflower Wind are seeking at least a one-month delay to the planned projects, and to renegotiate their PPAs.

  • The companies are developing 1,232 MW and 400 MW projects, respectively.

What they're saying: "An immediate suspension is crucial because, under the current PPAs, the Project is no longer viable and would not be able to move forward," Commonwealth said in its Oct. 20 filing, citing the war in Ukraine as among the disruptions hitting its supply chain.

  • Mayflower echoed the statements in its filing a week later.

Of note: Commonwealth Wind is owned by Avangrid, based in Connecticut.

Context: This is supposed to be a triumphant moment for the offshore wind sector.

  • After decades of delay, federal officials are rushing to lease parcels for development.
  • The Biden administration this month announced the first such auction for wind energy projects off the Pacific Coast.
  • And the Inflation Reduction Act signed this summer introduced lucrative incentives for clean energy development.

State of play: Instead, offshore wind, land-based wind and solar are getting rocked by supply chain disruptions, procurement challenges and volatile markets.

  • The sectors depend on PPAs, which promise investors stable long-term returns — and energy customers stable prices. They're a frequent prerequisite for securing financing.
  • Intensely volatile market conditions have made drawing up a PPA much more difficult.

The bottom line: Auctions and incentives only get you so far when they run up against the cold, hard reality of turbulent global markets.

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