Shell and Oceans Winds JV moves to cancel PPAs for 1.2GW Massachusetts offshore wind farm

SouthCoast Wind has agreed to cancel three power purchase agreements (PPAs) it negotiated last year for a planned 1.2GW offshore wind project in Martha’s Vineyard, Massachusetts. 

South shore of Martha's Vineyard, Massachusetts (pic credit: Brooks Kraft LLC/Corbis via Getty Images)

The joint venture between offshore wind specialists Ocean Winds and oil giant Shell has agreed to pay a $60 million fine to terminate the PPAs, which were signed with Massachusetts utility National Grid, Boston-based energy company Eversource, and New Hampshire utility Unitil. 

In 2022 SouthCoast Wind signed PPAs with the companies as part of its development of the 1.2GW SouthCoast Wind 1 offshore wind project (formerly Mayflower Wind). 

The decision, which needs approval from the Massachusetts state Department of Public Utilities (DPU), follows a similar decision to cancel PPAs by Iberdrola’s US subsidiary, Avangrid. In July, the company agreed to pay a fine of $48 million to three companies — including National Grid and Eversource — it had agreed PPAs with for the 1.2GW Commonwealth Wind project planned off the Atlantic coast of Massachesetts. 

SouthCoast Wind is now expected to pay a fine for reneging on its PPA deals with the three utilities, pending DPU approval. 

The joint venture previously signalled its intention to exit the PPAs amid a worsening economic situation. 

SouthCoast Wind alluded to the wider issues now buffeting global offshore wind development, which include supply chain pressures in the wake of the Covid-19 pandemic, soaring costs and a turbulent geopolitical climate in Europe. 

“Closing these contracts was never the plan but impacts of covid-related supply chain disruptions and the war in Ukraine made them unfinanceable,” a spokesperson for the joint venture told Windpower Monthly. 

They added that the joint venture still planned to pursue offshore wind opportunities in New England and had budgeted $100 million for 2023 despite moving to cancel the PPAs.