Can offshore wind withstand market storm? And what does it mean for Connecticut?
Greg Smith, The Day, New London, Conn.
5 min read
Jul. 29—Spotted off the coast of Waterford on Friday was L/B Jill, a massive vessel with 300-foot legs that support a raised platform and will be used to support work at South Fork Wind, an offshore wind farm under construction off Long Island.
The 12-turbine project, which will generate enough electricity to power 70,000 homes, is one of three offshore wind farms developed by Danish wind company Ørsted and Eversource expected to use the newly reconstructed Admiral Harold E. Shear State Pier in New London as an assembly and staging area.
Ørsted said all three projects remain on course in the face of struggles in the offshore wind industry. Price increases because of soaring inflation and supply chain bottlenecks have led to delays and attempts to renegotiate contracts in some long-planned projects along the East Coast.
Eversource, Connecticut's largest energy supplier, announced in May it was divesting itself of its stake in offshore wind assets, including a 50% stake in the $300 million redevelopment of State Pier in New London.
Citing "affordability concerns," Rhode Island Energy, that state's largest utility company, earlier this month opted not to enter into a power purchase agreement from a planned offshore wind farm called Revolution Wind 2, another joint proposal from Ørsted and Eversource ― submitted before Eversource announced its exit from offshore wind.
Reuters recently reported that shares in Siemens Energy had fallen because of issues with its wind division Siemens Gamesa and problems with onshore turbines and delays in production of some of its offshore wind turbine parts. The turbine parts arriving at State Pier, however, have no known problems.
Ørsted, in a statement, said it was "assessing our options" for Revolution Wind 2, the wind farm planned for federal waters off the coast of Rhode Island that was likely to make use of State Pier. The wind farm would be situated near Revolution Wind, another planned offshore wind farm that will supply Connecticut and Rhode Island with electricity from as many as 100 offshore wind turbines. That project appears to be on track for federal approval later this year.
Revolution Wind is among at least three planned offshore wind farms developed by Ørsted and Eversource that will use a newly upgraded State Pier in New London ― reconstructed to the tune of $300 million ― and accommodate massive wind turbine parts. Ørsted has yet to officially take over the projects after Eversource's exit from the offshore wind projects.
Revolution Wind is slated to supply 304 megawatts of electricity to Connecticut and 400 megawatts to Rhode Island, powering an estimated 350,000 homes.
State Pier has already hosted shipments of wind turbine components for Ørsted's South Fork Wind. New London will also be the hub for Sunrise Wind, a 924-megawatt project to supply power to New York.
"We are confident that State Pier will continue to be a vital hub for the offshore wind industry while also positioning the port to serve a broader range of industries and cargo than ever before," Ørsted said in a statement in response to questions from The Day.
Officials from the Connecticut Port Authority also expressed confidence that the $300 million investment in State Pier makes sense despite some of the struggles for the offshore wind at the moment.
Connecticut Port Authority's Interim Executive Director Ulysses B. Hammond said the partnership with Ørsted and Eversource was key in the redevelopment of State Pier to accommodate not only the massive wind turbine components but to secure a more productive future for what had traditionally been an underutilized port.
"State Pier is poised to become a premier break bulk and heavy-lift terminal," Hammond said. "There will be few ports like it when completed this fall."
Critics of the project point to its spiraling costs that for the moment, at least, restricts the use of the port to a single company and a single use.
Hammond said port operator Gateway will also be a major reason for the future activity at State Pier. Gateway, Hammond said, is part of the Enstructure family of companies, that owns and operates an integrated network of marine terminals and logistics assets along the East Coast, Gulf Coast and inland river system ― 21 terminals in all. Hammond said the company has an extensive reach in marketing the port for additional customers and uses.
Ørsted has a 10-year lease for use of State Pier, and the amount of the port authority's lease payments ― $2 million per year ― is not impacted by changes in Ørsted's projects. The state does stand to gain revenues if Ørsted secures new power purchase agreements with the state and extends that lease.
Power purchase agreements, which help fund the construction of offshore wind projects, are made with utility companies and funded by ratepayers.
Ørsted might also decide to sublease the property during lulls in activity. Hammond said it makes sense to market the property to other offshore wind developers along with national and international commercial break bulk and heavy-lift cargo interests.
Rhode Island Energy has an existing agreement with Ørsted for the 30-megawatt Block Island Wind Farm, which is the first operational offshore wind farm in the country. The company is also upgrading transmission lines to support Revolution Wind.
Rhode Island has an ambitious goal of 100% renewable electricity by 2023. Connecticut contracted for 304 megawatts from Revolution Wind in 2018 and another 804 megawatts from Park City Wind, pitched by Avingrid ― parent of United illuminating and Iberdrola. Park City Wind is attempting to renegotiate with the state because of increased costs.
Connecticut's Department of Energy and Environmental Protection, just this week, released two draft requests for proposals for new large-scale zero-carbon electricity resources, including offshore wind.
The bids are due by Jan. 31, 2024.
In the face of energy price spikes linked to global fuel markets and geopolitical events, DEEP Commissioner Katie Dykes said in a statement, "Investing in cost-competitive zero carbon energy is critical to make our energy supply more affordable, reliable, and clean, and will build on the important work the Lamont Administration and legislature have undertaken to address energy costs and grow Connecticut's clean economy and workforce."
