Rhode Island Energy has dropped its long-term power purchase agreement (PPA) with Ørsted and Eversource for the developers’ joint proposal of offshore project Revolution Wind 2.
The decision follows a four-month bid evaluation completed with Rhode Island Office of Energy Resources (OER) and Division of Public Utilities and Carriers (Division). OER and Division found the proposal failed to meet the requirements outlined in the Affordable Clean Energy Security Act.
Climbing interest rates, pricier capital and supply chain expenses piled onto tax credit uncertainty raised contract costs to higher than those previously proposed. This resulted in a price deemed too expensive for customers and out of alignment with established offshore wind PPAs.
The next 60 days will see Rhode Island Energy filing with the Rhode Island Utilities Commission on the details of its decision, including why the proposal did not meet the ACES requirement of energy cost reduction and other notes about the low score. OER and Division are also set to file comments, findings which the bidders will have an opportunity to respond to.
Ørsted and Eversource’s joint proposal was the only bid received by Rhode Island Energy from its RFP issued October 2022, which called for 600MW to 1,000MW of offshore wind to help with clean energy goals and rising electricity demands in the state.
Dave Bonenberger, president of Rhode Island Energy, said of the PPA pivot: “We recognize some will be disappointed that we didn’t choose to move forward on negotiating this PPA, but that doesn’t mean we are abandoning our commitment to offshore wind in Rhode Island. In fact, we are already in discussions with state and regional leaders about new opportunities to bring more offshore wind to the state, which we hope to progress in the coming months.”
In the interim, Rhode Island Energy will work with OER, stakeholders, and the Division on solutions for additional price-conscious offshore wind opportunities. The company has also commenced upgrades to commission lines during spring in support of Ørsted and the original Revolution Wind project.
In May (2023), Ørsted agreed to acquire Eversource’s 50% stake in its jointly owned uncontracted federal offshore wind lease for $625 million. The proposed site contains approximately 187,000 uncontracted acres of seabed for US offshore wind energy with a potential capacity of up to 4GW.
Part of the PPL Corporation, Rhode Island Energy delivers electricity and natural gas to more than 770,000 customers in the state.