Rhode Island utility rejects Revolution Wind 2 PPA on cost grounds

Just days after receiving news that its 704MW Revolution Wind Revolution Wind (704MW) OffshoreRhode Island, USA, North America Click to see full details, project off Rhode Island, could gain final approval this summer, Ørsted and Eversource’s second project for the area, the 884MW Revolution Wind 2 Revolution Wind 2 (884MW) OffshoreRhode Island, USA, North America Click to see full details, was rejected on cost grounds. 

Ørsted said its partners in the project were “disappointed” and would now “assess our options for Revolution Wind 2”.

The JV partners had submitted their proposal for Revolution Wind 2 in response to RIE’s most recent offshore wind tender in October 2022. 

It was the only bid submitted for the tender, but RIE said yesterday (18 July) that it was not moving forward on negotiations for a long-term power purchase agreement (PPA) for the project as it does “not fully meet state-mandated requirements” as detailed in the Affordable Clean Energy Security (ACES) Act.

“We’re disappointed that Rhode Island Energy did not select Revolution Wind 2,” a spokesman for Ørsted’s US offshore business division told Windpower Monthly. “This project would put Rhode Island’s 100% clean energy future in reach, delivering renewable energy to hundreds of thousands of homes and creating more than $2 billion in direct economic benefits to the state.”

It would bring “historic investments in local union jobs, workforce training, ports and the supply chain”, the spokesman added.

Costs outweigh benefits

Dave Bonenberger, RIE’s president, acknowledged the benefits the project could have brought to the area, but said they still did not justify proceeding with the project. “The economic development benefits included in the proposal were weighted and valued appropriately by our evaluation team, but ultimately it was determined those features did not outweigh the affordability concerns and other ACES standards,” he said.

The utility said higher interest rates, increased costs of capital and supply chain expenses, as well as the uncertainty of federal tax credits, all “likely contributed” to higher proposed contract costs. “Those costs were ultimately deemed too expensive for customers to bear and did not align with existing offshore wind PPAs,” it said.

RIE’s decision comes after what it called a “thorough, four-month evaluation of the bid”, which was completed in consultation with the Rhode Island Office of Energy Resources and the public utilities and carriers division.

Bonenberger said he accepted some would be disappointed by the decision but that it did not signal the firm was abandoning offshore wind in Rhode Island.

RIE has started transmission line upgrades to support Ørsted and Eversource’s original Revolution Wind project. A PPA for that project was signed in 2019, with the project expected to be operational in 2025.