Connecticut Drops Out of Offshore Wind Project to Stop Electricity Prices from Shooting to the Moon

Guest Post from the Institute for Energy Research.

Connecticut Governor Ned Lamont has officially opted out of a three-state bid for offshore wind power—the Vineyard Wind 2 project—using the process that the state has advocated and helped set up. Instead, the state announced procurements of grid-scale solar and storage projects, roughly equal in power to the wind project, though neither wind nor solar are reliable generation sources as they require the wind to blow and the sun to shine.

The initiative was a joint effort by Connecticut, Massachusetts, and Rhode Island, marking the first such collaboration of its kind in the United States. Governor Ned Lamont had expressed concerns about moving forward with the proposals resulting from this three-state request for proposals (RFP), primarily due to the potential cost burden on consumers.

Connecticut’s residential electricity rates are already among the highest in the country, second only to Hawaii, which has high rates due to its geographic isolation in the Pacific.

In its inaugural zero-carbon procurement, the state of Connecticut announced plans to advance three solar projects: a 200-megawatt project within Connecticut, two projects totaling 318 megawatts in Maine, and 200 megawatts of storage capacity associated with a project to be built on an undisclosed abandoned brownfield site in Connecticut. The state will negotiate long-term contracts directly with its two main utilities, Eversource and United Illuminating, after which the Public Utilities Regulatory Authority (PURA) will review and approve the deals.

Meanwhile, President-elect Donald Trump has declared his intention to halt all offshore wind projects as soon as he takes office, citing concerns over their high costs and inconsistent performance. During his first term, offshore wind permitting and approvals were delayed as studies evaluated their impact on the fishing industry. Given this, the incoming Trump administration is expected to further delay or suspend offshore wind permitting, potentially reversing the progress made under the Biden-Harris administration.

President Biden has set an ambitious target of 30 gigawatts of offshore wind capacity by 2030, having already approved over 16 gigawatts across 11 projects, with the most recent being in New England. The Biden administration has also expanded offshore wind leasing to include the entire East Coast, as well as the Gulf of Mexico and Pacific Coast. However, challenges persist, as demonstrated by the cancellation of a floating offshore wind tender in Oregon and a single bid received for an offshore wind lease in the Gulf of Mexico.

Offshore wind has been a growing industry in Europe for the past two decades, but the conditions in the U.S. are more challenging due to deeper waters and more hazardous environments. Even in Europe, the sector faces difficulties. For example, a recent lease auction in Denmark saw no participants, and in a government attempt to solicit bids for unsubsidized wind projects, no offers were made for three areas in the North Sea. Prospects for other subsidy-free auctions in the Baltic and Kattegat Seas, scheduled for 2025, are also uncertain.

The economic viability of offshore wind remains heavily dependent on government subsidies, particularly in the face of rising costs driven by inflation, interest rate hikes, and supply chain disruptions from the COVID-19 pandemic. Warren Buffett has notably remarked that without tax credits, which benefit his own company, wind energy would not be feasible.

The multistate offshore wind initiative involving Massachusetts, Connecticut, and Rhode Island was conceived earlier this year in response to challenges faced by East Coast offshore wind developers. Due to rising costs driven by the COVID-19 pandemic, the war in Ukraine, and subsequent inflation, many developers found their existing deals financially unfeasible. Some developers, including Avangrid, withdrew from agreements as a result. Avangrid abandoned an 804-megawatt contract in Connecticut, called Park City Wind, which included job creation and port development in Bridgeport. It also pulled out of a 1,200-megawatt contract in Massachusetts known as Commonwealth Wind.

In response to these changes, a new solicitation was launched for fresh project bids. After Labor Day, Massachusetts and Rhode Island announced their selections, while Connecticut took additional time to review the proposals. Massachusetts decided to move forward with the previously approved Park City Wind project, as it is the furthest along in terms of permitting. The state also selected a rebid project called South Coast Wind, which will total 1,087 megawatts. Rhode Island opted for a smaller, 200-megawatt project from South Coast Wind.

Massachusetts further chose to proceed with 800 megawatts from the 1,200-megawattVineyard Wind 2 project. However, due to the project’s distance from shore, which requires more costly cabling, the entire project must be developed in order to be economically viable. As a result, Vineyard Offshore, the project’s developer, withdrew after Connecticut decided not to participate in the remaining 400 megawatts of the project.

As a result of Connecticut’s withdrawal, the state is left with only one active offshore wind project: a 300-megawatt portion of Revolution Wind, which is currently under construction. Back in 2019, the Connecticut legislature authorized up to 2,000 megawatts of offshore wind, but as of now, no additional projects have been approved by the state.

Conclusion

Governor Lamont is still pursuing “green energy” for Connecticut but projects that are more affordable than offshore wind, including solar and on-shore wind projects in Maine.

The state is also experimenting with a small portion of offshore wind in its participation in the Revolution Wind project.

Connecticut’s withdrawal from Vineyard Wind 2 has made the economics untenable and the project developer has had to drop out.

President Biden announced that he wants 30 gigawatts of offshore wind by 2030 and has permitted over 16 gigawatts, but the incoming Trump administration will try to stop the permitting as offshore wind is unreliable as are solar and onshore wind, but it is also extremely expensive, costing more than triple that of onshore wind.

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