OPINION: Connecticut's wind partners are in a tailspin
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Aug. 30—Ørsted, the Danish utility that Gov. Ned Lamont has lavishly accommodated with more than $300 million in renovations to New London's State Pier, made a bombshell disclosure Tuesday that its U.S. offshore wind projects are in peril, facing a $2.3 billion loss in value.
Ørsted's share price dropped an astonishing 25% and is down some 70% from its 2021 peak.
"The situation in U.S. offshore wind is severe," Chief Executive Mads Nipper told reporters, according to Reuters.
The company said it would continue to build the six new wind farms it is developing off the East Coast, although abandoning them is an option.
"If the walk-away scenario is the economical, rational decision for us, then this remains a real scenario for us," Nipper was reported telling the news media, according to the Marketwatch stock news service.
Ørsted said it has not been successful so far in attempting to increase federal tax credits for the projects from 30% to 40%. And Tuesday's dire warnings seem like a shot across the bow to U.S. interests hungry for renewable energy.
Are the foreign utilities testing the waters to see if states are willing to renegotiate existing deals or make new ones that will inevitably mean ballooning costs for electric customers?
Ørsted is not alone in blaming supply issues, inflation and rising interest rates as threatening the viability of electricity supply contracts it has already signed with New England states.
Avangrid, the Spanish renewables developer that has already walked away from Massachusetts contracts, said last year it was going to seek an adjustment in its Connecticut contract and ask to make electric customers here pay more for the planned 804 megawatts from its Park City Wind project south of Martha's Vineyard.
The balance of Connecticut's anticipated wind power, in addition to the deal with Park City, would be 400 megawatts from Ørsted's Revolution Wind project, which the company said Tuesday is among those in financial jeopardy.
As the wind companies outline their peril, the reaction here in Connecticut seems especially mute and flat-footed.
I began Monday to seek comment from Department of Energy and Environmental Protection Commissioner Katie Dykes about the current status of the contract with Avangrid, in light of the company's announcement last year that it wanted to renegotiate it.
The DEEP made little comment at the time and issued only a terse statement to the Connecticut Mirror in May, when asked again about the status of its principal offshore wind procurement contract.
After multiple phone calls and emails, I finally got a statement from DEEP communications, in the name of Dykes, just before my deadline Wednesday. It was word-for-word the exact, three-sentence, say-nothing statement the commissioner gave to the Mirror in May.
"DEEP has been having discussions with Avangrid and other stakeholders in recent weeks to understand the economics of the project in light of the challenges many infrastructure projects are facing," the statement said, mentioning inflation, COVID-19 and the war in Ukraine.
Recent weeks? Avangrid first said publicly last September it wanted to renegotiate the deal.
I understand that it's hard to know what to say, let alone come to the phone and answer questions, when the renewable energy policy you've been working on for years appears to be unraveling.
But I think Connecticut voters and electric ratepayers deserve more than a lame, three-month-old, regurgitated statement from the DEEP commissioner, as the state's renewable energy policy appears to be melting down. I'm sure they pay those communications staffers a lot of money.
Gov. Lamont also had nothing to say Wednesday after I asked for comment about Ørsted's suggestion that it could walk away from its financially troubled U.S. offshore wind projects. Nothing. No response at all. Crickets.
Of course for Gov. Lamont, an Ørsted U.S. meltdown would be especially embarrassing, after he oversaw, on behalf of the Danish utility, a $300 million renovation of State Pier, with its massive overruns, corruption scandals and ongoing criminal investigations.
There are similar facilities already in place in the Northeast, and the equipment now at State Pier will be used to build a wind farm to power New York homes.
It seems at least possible, from the news this week, that State Pier, which Lamont closed to traditional shipping and spent hundreds of millions renovating for the very specific needs of the offshore wind industry, might never play a role in providing electricity to Connecticut.
This is the opinion of David Collins.
