Wind farm at sea.
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The developer of a major offshore wind energy project in Massachusetts has asked state regulators to pause reviewing the contract for a month as global price increases, inflation and supply chain shortages are disrupting the plan.
According to a recently filed motion from the developer.
Commonwealth Wind lawyers cited global increases in commodity prices, partly due to the war in Ukraine, the sudden rise in interest rates, prolonged supply chain restrictions and continued inflation as reasons for the higher projected construction costs.
“A one-month suspension would give the parties an opportunity to evaluate the current situation of the project and potentially agree on changes to the PPAs… which could allow the project to return to viability,” they wrote.
The project’s rising costs are due to the US aggressively ramping up its offshore wind industry. The Biden administration has set a goal to allow 30 gigawatts of offshore wind energy by 2030, enough to supply 10 million households with clean energy while creating new domestic jobs.
The Bureau of Ocean Energy Management will also hold its first-ever West Coast offshore wind lease sale in December and has issued 10 lease sales and 27 active commercial wind leases to date in the Atlantic Ocean, from Massachusetts to North Carolina. .
The president’s Inflation Reduction Act passed earlier this year includes a federal tax provision that will support offshore wind. The provision provides for a 30% tax credit for offshore wind projects that start construction before January 1, 2026.
More offshore wind developers are expected to claim the tax credit as the construction costs of their plans continue to rise.
Commonwealth Wind said a suspension would allow parties to consider possible approaches to restore the project’s viability, including the cost-cutting measures and tax incentives under the Inflation Reduction Act.
Even with a short hiatus, the developer said the project is expected to go live in 2028 and help the state of Massachusetts meet its goal of halving greenhouse gas emissions by the end of the decade, the developer said.
“Commonwealth Wind remains fully committed to the project and to providing cost-effective renewable energy from the project to Massachusetts residents and businesses in a manner that advances Commonwealth energy and climate policies,” the attorneys wrote.